Richer Homeowners Feeling Credit Crunch More - 12-02-08

December 2 - As the festive season approaches, many South Africans who earn in the high income bracket will be forced to tighten their belts even more, as they struggle to maintain their homes and continue paying off high bonds.

Before the current downward spiral of the South African property market, exacerbated by the global credit crunch, many high income earners bought multi million rand homes in security complexes. However, says Prof. Carel van Aardt, from Unisa's Bureau for Economic Research, many of these people are struggling to keep up with their home loan payments after seeing a staggering increase of 36% to their monthly instalments due to interest rate increases.

Since the beginning of the year, 700 homes have been repossessed by the four major banks in the country.

While those most affected seem to be in the R500,000 to R750,000 income bracket, age also plays an important part in the statistics.

"Those finding it harder to survive are in the 30 to 45 age bracket with many still paying off large bonds and car repayments," said van Aardt.

With the new year approaching, analysts were hoping that 2009 would see a change in the downward trends in the South African property market. However, with the credit crunch affecting all industries and trades, many are not too optimistic.

"Consumers have been under pressure for some time," said the chief economist for Nedbank, Dennis Dykes, "but this difficult period looks set to continue further into the new year."

Luthando Vutula, the managing executive of Absa Home Loans echoes these sentiments. "Customers are under severe strain," he concluded.