How much are South Africans Spending on Paying off their Debt
South Africans spend 9% of their money on debt payments. Their total household debt is 62% of their total income.
The South African Reserve Bank (SARB) revealed this in its Quarterly Bulletin for the first quarter of 2024.
The Reserve Bank said household debt rose towards the end of 2023, in line with increased spending.
South Africans are relying more on debt and credit to support their lifestyles due to the increasing cost of living.
In the last quarter of 2023, disposable income increased faster than debt, lowering total household debt to 62.3% of disposable income.
The proportion of disposable income that households use to service debt stayed steady at 9%. This implies that almost R10 out of every R100 earned in South Africa is allocated towards paying off existing debt.
During Covid-19, many people took on a lot of debt, causing debt payments to increase. At one point, debt reached almost 75% of income.
South Africans are now using more of their money to pay off debts because interest rates have gone up. This is the highest it has been in the last five years. This is the highest level in the past five years.
Debt-servicing costs have slightly decreased as South Africans have adjusted to the higher cost of living in the country. Rather than accruing additional debt, they are swapping luxury expenditures for essential purchases.
However, South African households continued to do well with their overall wealth, as this increased in the fourth quarter of 2023.
The Reserve Bank stated that the increase was because the total assets had a higher market value. This was because the JSE All Share had a comeback at the end of last year.
The increased asset valuation stemmed from the rise in share prices and, to a smaller degree, residential property values.
This metric mainly benefits wealthier South Africans who invest in stocks and own property.
The net wealth to nominal disposable income ratio increased to 396% in the last quarter of 2023, up from 386% in the preceding quarter.
Each year, the ratio increased slightly. In 2023, it reached 393%, up from 392% in 2022. This was due to net wealth growing slightly more than nominal disposable income.
Consequently, the net wealth of households stayed approximately 3.9 times higher than their yearly disposable income in both 2022 and 2023.
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