It could be making the consumer less susceptible to frivolous unnecessary expenditure and possibly, therefore, more focused on the purchase of appreciating assets, particularly homes, that will see them through the current low growth phase in the South African economy.

John Smyth, CEO of Multi NET Mortgages, said recently, that he agreed with John Loos, the FNB’s Household and Property Sector Strategist, when he said (as he has done recently) that ongoing pressure on net wealth is likely ultimately to lead to a rise in household sector savings.

“With the banks making it more difficult to obtain money for non-appreciating assets, the era of easy credit and spending on non-essentials is, I believe, at last giving way to one in which the spending patterns are more in line with South Africa’s traditional saving habits – in which a house purchase once again becomes the overriding priority for many South Africans.”

One of the few encouraging statements in John Loos’s latest report, said Smyth, is that increased pressure on consumer finance (brought about by the current low growth trends in the economy) have not as yet resulted in increased financial stress.  Insolvencies, Loos has reported, continue to decline.

Although the situation may not last well into 2016, said Smyth, and although a healthier debt to disposable income ratio is now not likely to come about for at least another year, there is considerable evidence that South African consumers are maturing, becoming more responsible and again setting their sights on owning a home.

“In the light of this evidence we can, as I have said before, expect the household financing sector to continue to obtain reasonably satisfactory turnovers, even though there is now so much negative economic sentiment out there and so many factors which on the face of it might seem to make savings and a look- to- the-future mentality hardly worthwhile. 

We as bond originators will continue to foster and encourage this and continue to attack the easy-spending mentality of two or three years ago.”