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During these tough economic there is still one saving grace: the low-interest rate

South Africans are in for a tough couple of years as they contend not only with a global pandemic, economic weakness and social unrest, but a rising cost of living that is spiralling out of control for many families.

The only real saving grace is the low-interest rate. Property rates and taxes have increased, as have fuel and utility tariffs, outweighing most salary increases – for those who have been fortunate to receive them.

Many families are, instead, facing reduced salaries and even complete loss of income. And this, says Craig Mott, Rawson Property Group’s sales manager in the Western Cape, can have knock-on effects on people’s lifestyles and mental health.

“Not having enough money to get through a full month can be really worrying for any individual.” Residents in the main three metros will see the following increases for the 2021/2022 year:

Property Rates:


Cape Town 4.5%

Joburg 2%

eThekwini 4.9%


Cape Town 13.48%

Joburg 14.59%

eThekwini 14.59%

Water and sanitation:

Cape Town 5%

Joburg: 6.8%

eThekwini: 8.5%

Refuse removal:

Cape Town: 3.5%

Joburg: 4.3%

eThekwini: 4.9%

More concerning, however, is that these municipal increases will be higher next year. FNB economist Koketso Mano says price inflation for the next year is actually lower than the previous year, with average metro and rates increases declining from nearly 6% in 2020/2021, to 5.6% in 2021/2022.

“This lower inflation will be supported by lower property rates, which are in the region of 3.5%.” However, inflation is expected to rise towards the longer-term average of close to 9% between July 2022 and June 2023, driven by pressure on water availability.

“Municipal electricity tariffs should be hiked by 14.5% this year (metro average), following a 6.2% average over  July 2020 to June 2021 period. Further pressure is expected in July 2022 as the National Energy Regulator of SA continues to liquidate the court rulings in favour of Eskom’s disputed Regulatory Clearing Account decisions.

“The speed at which these get passed onto the consumer will be better understood early next year.” Fortunately, Mano says, petrol prices should moderate going into next year as Opec+ oil producers phase out oil production limits and alleviate pressure on global Brent crude oil prices.

“These declining petrol prices mean that fuel price inflation will fall considerably during 2022, reducing pressure on household finances. “Food and non-alcoholic beverages inflation should also moderate in 2022, falling from current highs of over 6% to average just below 4.5% in 2022 – supported by abundant supplies in domestic agricultural markets.”

This alleviation in cost-push price pressures, coupled with subdued demand-driven inflation, should assist in mitigating rising utility inflation, he adds. Geoffrey Lee, Absa’s managing executive for home loans, retail and business banking, says widespread wage restraint in the economy, which constrains disposable income, is putting pressure on household finances. In addition, there are unlikely to be sustainable “big improvements” in household disposable income without stronger employment growth.

“To this end, consumers will undoubtedly remain under financial pressure. “Covid-19 and the devastating scenes of recent unrest and violence in parts of South Africa, including the vandalising of infrastructure, have added to this financial pressure.”

However, interest rates are expected to remain low for a while, although the South African Reserve Bank will have to start removing the current “highly accommodative monetary policy stance” as the economic recovery gains traction. Absa Research forecasts an increase of 75 basis points in the repo rate next year.

“Against this background, mortgage affordability for most borrowers has been significantly enhanced through the current low-interest cycle. In essence, the large reduction in interest rates has stimulated the demand for housing by making repayments more affordable…

“More importantly, this has helped a much greater number of customers with continued affordability when it comes to servicing their loans (despite pressure on income during the pandemic).” Still, Lee acknowledges that there is “no one-size-fits-all approach” when it comes to consumers’ unique financial situations, and while most customers who were on Absa’s Payment Relief Programme have made a full recovery, its arrears levels have “undoubtedly increased where our customers have been permanently affected by the pandemic’s effect on the economy”.

“The reality is that the Covid19 pandemic and the recent unrest in South Africa have had profound financial consequences for many. And while the reduction of rates has provided a much-needed boost for the market, we may not see the same level of activity continue sustainably if this is not supported by economic growth.”

Mott says people need to “make every rand count in their favour”, and that includes re-looking at household budgets, cutting back on non-essential items and using household items sparingly. Non-essential spending, he says, includes takeaway foods, cellphone upgrades and any service that one is paying for but has not used in two or three months.

“Owning a property comes with maintenance requirements. Set out a plan for the maintenance and attend to the items that are the most necessary without ignoring issues that may end up costing you more down the line.” Mott adds that, in attempts to cover expenses, many people are turning to communal living and opting to share spaces with family or friends.





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