06 Feb 2013
The value of outstanding credit balances in the South African household sector recorded growth of 9.9 percent year-on-year (y/y) at the end of 2012 from 6.3 percent y/y as at the end of 2011.
According to the Absa report, growth of almost 10 percent in household credit balances ending 2012 was largely driven by the components of instalment sales and unsecured credit, with mortgage balances growth that remained subdued.
Jacques du Toit, Absa Home Loans property analyst says growth in instalment sales balances (15.3 percent share in total household credit balances) came to 19.5 percent y/y at the end of December 2012 with growth in unsecured credit balances (22.8 percent share) at 28.6 percent y/y.
He says the total private sector mortgage balances including commercial and residential mortgage loans, recorded growth of 1.9 percent y/y up to the end of December 2012, compared with 2.5 percent y/y a year ago.
Commercial mortgage balances contracted by 0.9 percent in 2012 after growth of 6 percent in 2011, explains du Toit.
“The value of outstanding household mortgage balances increased by 3 percent in 2012 from growth of 1.2 percent in the previous year,” he says.
The share of outstanding household mortgage balances in total household credit balances continued its downward trend, ending 2012 to 61.3 percent.
Du Toit says the ongoing decline in the share of household mortgage balances is the result of still relatively low growth in this component of total credit balances, while strong growth in instalment sales and unsecured credit balances caused the share of these components to rise during last year.
“In view of trends in and the outlook for the economy, household finances and consumer confidence, growth in mortgage balances is forecast to remain in single digits in 2013.”
Interest rates are projected to remain at current levels before rising around mid-2014 and this will continue to support the property market and the affordability of mortgage finance. – Denise Mhlanga
Denise MhlangaProperty journalist at property24.com
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