How much South Africans spend on paying off debt

South Africans spend 9% of their disposable income on debt-servicing costs, while total household debt makes up 62% of total income. 

This was revealed by the South African Reserve Bank (SARB) 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. 

This indicates that South Africans are increasingly turning to debt and credit to fund their lifestyles as the rising cost of living continues to bite. 

However, disposable income rose quicker than debt in the last quarter of 2023, reducing total household debt as a share of disposable income to 62.3%. 

Debt-servicing costs paid by households remained unchanged at 9% of disposable income. This means that nearly R10 of every R100 earned in South Africa goes to servicing existing debt. 

Much of the debt-servicing costs come from a sharp spike in household debt during the Covid-19 pandemic, with debt peaking at nearly three-quarters of income. 

Coupled with the rapid rise in interest rates, South Africans are spending more of their income on debt-servicing costs than at any time in the last five years. 

The growth in debt-servicing costs has moderated slightly as South Africans have adapted to the rising cost of living in the country. Instead of taking on more debt, they are substituting spending on luxuries for necessities. 

These trends are shown in the graph below. 

However, South African households continued to do well in terms of their overall wealth, as this increased in the fourth quarter of 2023. 

The Reserve Bank attributed this to the higher market valuation of total assets as the JSE All Share staged a comeback at the end of last year. 

The higher asset valuation emanated from the higher prices of shares and, to a lesser extent, residential property.

It must be noted that this metric is somewhat skewed towards richer South Africans as they are the people invested in listed equity and own properties. 

The ratio of net wealth to nominal disposable income rose to 396% in the fourth quarter of 2023 from 386% in the third quarter. 

On an annual basis, this ratio edged higher to 393% in 2023 from 392% in 2022, as the increase in net wealth marginally exceeded that in nominal disposable income. 

As such, households’ net wealth remained at around 3.9 times the value of their annual disposable income in both 2022 and 2023.


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