South Africa’s household debt crisis: shocking average revealed – realestate.com.au

Is your household budget under pressure?

You’re not alone.

New data shows the average South Australian household currently has debts of more than $215,000.

Data Finance Analytics (DFA) – which collects its data through continuous, ongoing household surveys that monitor financial, real estate and economic trends to gather information on mortgage, rental and investor stress – has exposed the financial pressures facing the community.

According to the data, the average mortgage on a South Australian owner-occupied home is $134,053, while the average amount tied up in an investment property is $58,738.

South Australians also have an average of $5659 in outstanding card balances, Payday and Buy Now Pay Later debts.

On average, there is an additional $17,506 outstanding in loans for cars, boats, improvements and personal expenses, bringing the average total debt to $215,956.

DFA founder and data scientist Martin North said total mortgage debt appeared low because the data was a mix of first-time buyers with generally low value and legacy mortgage holders who had paid off a large portion of their debt.

“Add to that, some are making more than minimum repayments to pay off debt faster – saving significant interest charges they would otherwise have to pay,” he said.

“That said, there is a segment of households that are highly indebted and under financial pressure.

“Averages mask the real effects.

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“Note also that there is a concentration of other debt in stressed households; when they are under pressure on cash flow, they turn to credit cards or other lines of credit, often at high interest rates.

“That’s why I focus more on household cash flow than on loan balances.”

He said the majority of households would not be significantly affected by a small rate hike – provided they keep their jobs.

“There is a segment of the population that already has negative cash flow, and for them small rate increases will be disastrous and potentially a tipping point.”

Mr North said first-time buyers who have gone to great lengths will be hardest hit by a rate hike.

“Many will make it sustainable by cutting back on other expenses and simply putting more of their disposable income into paying down debt,” he said.

Finch Financial CEO and mortgage expert Julian Finch

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Finch Financial founder and CEO Julian Finch said buyers can save significantly by contacting their lender and asking for a better deal.

“Banks don’t call their customers to say a cheaper loan is available,” he said.
‘If you don’t check it, you’re probably paying too much.

He said households should review all expenses, not just their mortgage.

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“Insurance, phone plans and everyday bills often creep in without people noticing,” he said.

“Small savings in multiple areas can make a real difference.

“In a market like this, doing nothing is often the most expensive option.

“Borrowers who remain proactive are always in the strongest position.”

– with Aidan Devine