South Africans do not have enough saved to see them through an emergency
Households are reducing their debt levels but not rapidly enough, and they are not doing enough to save and invest. As a result, South African households’ aggregate real net wealth has been on a declining trend for the past two years. This is the main finding of the latest Momentum/Unisa wealth report. It estimates that households’ real net wealth fell from about R7.1-trillion in the second quarter of 2014 to R7.05-trillion at the end of the second quarter of 2016. Between the second and third quarters of last year, a further R16bn was wiped out, according to the South African Household Wealth Index — a decline of 0.9% on a seasonally adjusted and annualised basis. The main driver behind this long-term trend has been a decline in the real value of household assets rather than a rise in households’ liabilities or debt. In fact, households are de-leveraging. On aggregate, they have managed to reduce their liabilities over the past year.
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