In the first seven months of 2019 outstanding credit balances in the South African household sector (R1 687,8 billion) increased by 6,3% year-on-year (y/y), with growth slightly down from 6,5% y/y up to the end of June.

Over the past 20 years, the period 1st quarter 1999 to 1st quarter 2019, the consumer has cumulatively “outperformed the economy, assisting the Retail Property Market to outperform other major property sectors over much of this period.

Much in line with developments in 2018, private sector-financed building activity (see explanatory note) in the South African market for new housing showed divergent trends in early 2019, based on data released by Statistics South Africa.

Minister Tito Mboweni’s 1st Budget is likely to be a “tough” budget, with economic weakness constraining revenues along with a seemingly endless list of urgent spending priorities, some bordering on crises, giving him little room to manoeuvre.

Private sector-financed building activity (see explanatory note) in the South African market for new housing showed continued diverging trends on specifically a segment level in the first eight months of 2018, which caused the planning phase of new housing to have improved whereas the construction phase has contracted over this period.

Uptick in household credit and mortgage balances growth in the first half of 2018, while home loan repayment patterns were divergent across income categories in the twelve months up to mid-2018

Residential building activity in the planning phase improved, with the construction phase contracting in the first four months of 2018.

There was a very slight imprivement in levels of home maintenance and upgrades early in 2018,but this was more on the maintenace side than on the upgrade side.

Our Firstrand expectation is for a 25 basis point interest rate cut in the SARB’s Repo Rate, when its Monetary Policy Committee (MPC) meeting concludes on Wednesday. Should this happen, it would lower the Repo Rate to 6.5%, and the Prime Lending Rate of banks to 10%.

Ongoing subdued household credit and mortgage balances growth.