Knee deep in debt
SOUTH AFRICA’S RATIO of household debt to disposable household income has reached record levels.
But SA still looks pretty frugal compared with many other countries. Britain is one particular high-profile example.
The debt/income level there is now at 140%.
SA’s debt ratio was 73,1% in the third quarter of 2006. That was a whacking rise on the 49,8% level at end-2002. This surge in debt levels – at least on this system of measurement – has naturally caused a lot of concern.
But compare it with the situation in the UK. • The Council for Mortgage Lenders has announced a 65% increase in the number of houses repossessed last year compared with 2005. More than 100 000 individuals declared themselves bankrupt in 2006 – and experts think this could easily rise to 150 000 this year. Jenny McCartney of the Sunday Telegraph says the UK stock of personal debt has soared to £1 300bn, “making us one of the most indebted countries in the world.” Steve Hawkes of The Times observes: “Britain’s spiralling debt crisis has reached new heights. The total number of bankruptcies and insolvencies between October and December last year was 44% up on the same period in 2005.”
SA still looks pretty frugal compared with many
There is, however, one massive statistical failing in the macro-analyses.
They take no account – nor do the figures for SA, or for almost every other country – of the colossal rise in the value of gross personal assets, crucially from booming house prices.
There have been some casualties, yes, but there have been vastly more successes. That applies to SA as well as the UK. Millions of homeowners in both countries – as indeed in the United States, Australia and elsewhere – are very well placed financially.
Remember that amid all the tales of gloom.