Small increases in defaults: what it means for property repayments and mortgages
For the Human Settlements Sector to achieve its housing delivery mandate, there is a need for all relevant stakeholders to integrate their infrastructure plans leveraging the Intergovernmental Relations (IGR).
Image: Simphiwe Mbokazi
Data from the credit bureau shows that defaults, however small, have increased in property repayments and mortgages in recent years.
Benay Sager, Chairperson of the National Debt Counsellors' Association, told Independent Media Property that while it was still a very small increase, it has risen compared to a few years ago, driven largely by the pressure that homeowners are under.
'The movements are driven mainly by changes in the interest rates, and if you look at interest rates five years ago, they were very low in the midst of Covid.
"This created a bit of an artificial boom, and since then, the property sector has really slowed down in terms of new purchases. Similarly, in terms of servicing debt in the property sector, things have become a little bit harder,' Sager said.
He added that it is not so much debt levels but interest rates that really impact potential considerations when buying or investing in a property.
The NDCA said interest rates really drive property ownership, and they were already seeing the slowdown here. It said that unless the interest rates drop significantly, which is unlikely to happen, they did not see this make-up changing much in terms of who can buy property and the other big dynamics happening there.
'Some parts of the country are becoming more unaffordable, like Cape Town, which probably means other parts that are more affordable will benefit.'
Sager said that while the property sector is an open market, and that has to be seen playing itself out, rates are a big consideration from a government perspective.
'Rates have been continuing to increase above inflation over the last several years, so perhaps that should be curbed, as we see a significant portion of consumers' expenses going towards paying rates and electricity and other regulated factors.
"If these increases can be curbed, and the entities that provide these services can become more efficient, it will definitely benefit consumers,' Sager said.
Commenting on the release of the DebtBusters' Q1 2025, Sager said over the past nine years, electricity tariffs have increased by 135%, the price of petrol has risen by 88%, and the compound effect of inflation is 52%.
He said as a result, consumers who applied for debt counselling in Q1 2025, on average, needed 69% of their take-home pay to service debt. This was a significant increase compared to previous quarters and the highest since 2017.
The most vulnerable consumers, taking home R5 000 or less per month, use 76% of their income to repay debt. Those earning R35 000 or more spend 77% servicing debt. The ratios for these income groups are the highest since DebtBusters started analysing the data in 2016.
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Speaking at the DEVAC Infrastructure Summit last week, Thembi Simelane, Minister of the Department of Human Settlement (DHS), indicated that the they were advancing legislative amendments to ensure fair access to home loans and eliminate discriminatory lending patterns, prevent illegal land invasions and fast-track formal township development and develop the Human Settlements Bill to reinforce a spatially just housing delivery system.
Simelane said to improve efficiency across the sector, the department is currently expediting the process of developing the Digital Human Settlements 11 Management System (DHSMS), as part of the broader digital transformation strategy of the government, thereby addressing issues of inefficient beneficiary management and unreliable project data.
The DHS minister also said that through their various funding sources and key deliverables, the human settlements sector was able to gazette 50 catalytic projects that are to yield 696 280 housing opportunities of mixed typologies such as RDP Walk-Ups, Free Standing BNGs, Social Housing Units, Affordable Rental Stock, Community Residential Units (CRUs) and Serviced Sites.
She said typical examples of these projects include projects like Lufhereng in City of Johannesburg, Vista Park in Mangaung, Greater Cornubia in eThekwini, Matlosana N12 in North West and the N2 Gateway in the City of Cape Town.
With these projects, the human settlements sector said it aims to accelerate the implementation of the spatial transformation of cities that is aligned with the Spatial Land Use Management Act 16 of 2013, whilst considering that there are limited land parcels that are located closer to work opportunities.
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Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Regional disparities further highlight the injustice. South Africans are already paying up to R2 per litre more than our neighbours due to levies and taxes. In Gauteng, fuel costs R21.40 per litre, while in Botswana it's R19.50, in Lesotho R19.30, and in Namibia R20.67. Why are we being punished while fuel is supplied to these countries at lower rates? This disparity is a slap in the face to South Africans already struggling to make ends meet. The fuel levy's imposition is also illegal, and it cannot be implemented on June 4, 2025 because the Minister of Finance has bypassed critical budgetary approval processes mandated by South African law and the Constitution. Section 77 of the Constitution requires that any tax or levy, such as the fuel levy, must be introduced through a Money Bill passed by Parliament. 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He stated: 'Parliament must reclaim its constitutional role in budgeting to ensure that fiscal policy serves the people, not the interests of capital.' He criticised the regressive nature of the fuel levy and the failure to explore progressive alternatives like a wealth tax—a long-standing EFF clarion call. A wealth tax on the richest South Africans would target the top 1%, who hold a disproportionate share of the nation's wealth, to fund public services without burdening the poor. This progressive measure could raise billions to support education, health, and social development, reducing inequality and fostering inclusive growth, unlike the fuel levy, which punishes the most vulnerable. Dr. Tshimomola's presentation revealed that between the March and May versions of the budget, over R28 billion was cut from non-interest spending, including reductions in education, health, social development, and the criminal justice system. 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We call on all South Africans to join this fight—in the courts, on the streets in the picket lines. The people united will never be defeated, and together, we will achieve economic freedom in our lifetime. * Carl Niehaus is an EFF Member of Parliament (MP) ** The views expressed do not necessarily reflect the views of IOL or Independent Media.
