Contact Us |
Ongoing subdued household credit and mortgage balances growth.
While economic growth is expected to be mildly better in 2017, this is not yet expected to be enough to turn Real Household Disposable Income growth positive on a per capital basis.
Continued declining household credit and mortgage balances growth The first ten months of 2016 saw growth in outstanding credit balances in the South African household sector slowing down to a much subdued 1% year-on-year (y/y), with the value of these outstanding balances at R 1 478,6 billion at the end of October.
Growth in outstanding credit balances in the South African household sector remained low at 1,4% year-on-year (y/y) up to the end of August 2016.
The value of and growth in outstanding credit balances, especially unsecured credit, in the South African household sector was in April 2016 impacted by the inclusion of data for the new African Bank as from that month.
Perhaps one contributing factors to the formation of residential property “bubbles” or “overshoots” across the world over the years is the lengthy leads and lags between the start of a “negative” economic event, such as an interest rate hiking cycle, and the start of a rising trend in bad debt levels.
Relatively stable growth in household credit and mortgage balances.
ABSA Home Loans Property Analyst, Jacques du Toit, notes further uptick in household credit and mortgage balances growth.
John Loos, Household and Property Sector Strategist at FNB observes 'a tougher year for residendial mortgage lending ahead, as the residential property market slowly moves into its super-cycle “Correction”.'
Economically, we are likely in the early stages of what I call the “stagnation” or “correction” phase of the economic super-cycle, “early” meaning perhaps 4-8 years in (depending on whether you ignore the short growth up-tick around 2010/11 and start the clock in 2008, or otherwise start counting from 2012), and the length of such super-cycle stagnation phases can conceivably roll on for far longer than that.