A concerning trend has emerged in South Africa’s property market, highlighting the financial struggles faced by homeowners. According to First National Bank’s recent analysis, nearly 23% of homeowners who sold their properties in the third quarter of 2024 did so because of financial difficulties—up from 21% in the previous quarter.
This increase places significant attention on the ongoing cost-of-living crisis, which is making it harder for South Africans to sustain property ownership. The long-term average for financially driven home sales, recorded since 2007, is 18%, making the current figure alarmingly high.
Mortgage Arrears Hit Record Highs
Adding to this pressure, data from the National Credit Regulator shows that by mid-2024, 7.8% of South Africa’s mortgage debtors were behind on payments—a sharp rise from the historical average of 4.5% to 5%. This highlights the growing burden of debt as economic challenges mount.
The Cost-of-Living Squeeze
A perfect storm of rising inflation, soaring interest rates, and stagnant wages has left many households struggling to cover basic expenses like food, fuel and utilities. These financial pressures are eroding disposable income, making it harder for homeowners to keep up with mortgage payments and other debts.
Property rates, water and electricity tariffs have also risen sharply, further straining household budgets. Over the last 15 years, property rates increased at an annual average of 6.8%, outpacing the inflation rate of 5.1% per year. Electricity and water tariffs have risen even more dramatically, increasing five and six times faster than inflation, respectively, between 1996 and 2024.
A Call for Action
The financial distress facing South African homeowners highlights an urgent need for intervention. Targeted measures—such as favourable interest rate adjustments and support mechanisms for struggling homeowners—could help ease the burden.
Without meaningful action, this crisis risks further destabilising the housing market and broader economy, leaving many South Africans without viable paths to financial security. The trend of financially driven home sales serves as a stark reminder of the challenges faced by households and the need for collaborative efforts to address this growing issue.
As the cost-of-living crisis intensifies, ensuring economic relief for homeowners is critical to preventing further strain on South Africa’s housing market and economy.