Advertising in your face and blaring on the streets, but the South African consumer is deleveraging like there is no tomorrow.
This will have enormous consequences for the economy, especially for the small business owner.
Many small business owners trade in items or services completely or partially connected to the housing industry.
The housing bubble popped and now what.......
South Africa: Massive Slump In Debt
Cape Town - South African consumers continue to experience tremendous pressure and have firmly turned their backs on credit over the past year.
The latest consumer credit report shows that they have not only reduced house purchases to an absolute minimum, but have also avoided like the plague entering into debt for cars and the like.
The report shows that the value of new home loans was only R17.6bn in the second quarter of the year - an incredible 60% down on the R42.6bn for the corresponding period in 2008.
The value of new mortgages declined to such an extent over 12 months that in the second quarter the biggest category of new consumer debt was securitised debt.
This includes vehicle and furniture finance, which now represents R18.8bn or 42% of the total. Even this category of debt has dropped 27% from a year ago.
The report also indicates that the total value of credit used in the second quarter was R50.9bn - 40% down on the R85.6bn for the corresponding quarter last year.
The report was compiled by the National Credit Regulator from information furnished by registered credit providers.
The report shows that small mortgages (under R150 000) have come off more sharply. Most (90%-plus) of those approved have gone to people with disposable incomes of more than R15 000/month. Some 67% of the total credit in the category for vehicle and furniture loans has been granted to the same category.
Econometrix managing director Rob Jeffrey said that from the information it appeared that households are deferring larger expenditure in favour of immediate payments.
He warned that the current economic conditions still required moderate consumption and that debt should be reduced.