Distressing trend emerging for homeowners in South Africa

Almost a quarter of South Africans who sold their homes do so due to financial pressure, while those in SA’s mortgage debtors’ books in arrears are also at record highs.

This figure marks a troubling increase, highlighting the growing burden on South Africans amid an intensifying cost-of-living crisis.

FNB’s analysis reveals that 23% of homeowners who sold their properties in the third quarter of 2024 did so because of financial difficulties, up from 21% in the previous quarter.

This percentage is notably higher than the long-term average of 18% recorded since the data series began in 2007.

Such statistics paint a grim picture of the challenges homeowners face as economic pressures erode their ability to maintain property ownership.

Compounding the issue, the National Credit Regulator’s data indicates a sharp rise in mortgage arrears, with 7.8% of South Africa’s mortgage debtors falling behind on payments by the second quarter of 2025.

This figure far exceeds the historical average of 4.5% to 5%, signalling that financial distress is becoming more widespread among homeowners.

These numbers underscore the importance of favourable interest rate adjustments to ease the strain on the housing market, as rising borrowing costs exacerbate financial challenges.

The root of this distress lies in the ongoing cost-of-living crisis, which has deeply impacted South Africans across various income brackets.

Soaring inflation, escalating interest rates, and stagnant wage growth have created a perfect storm, leaving many households struggling to keep up with expenses.

Essential costs, such as food, fuel, and utilities, have surged, reducing disposable income and placing additional pressure on debt repayment obligations.

Property owners in South Africa face an increasingly unsustainable financial burden as property, water, and electricity rates continue to rise sharply, with no signs of slowing down.

An exploration of tariffs over the last 15 years highlights the predicament property owners find themselves in and will likely continue to face in South Africa.

Stats SA noted that property rates recorded an average annual growth rate of 6.8% from 2009 to 2024 across 39 municipalities, totalling 117 price comparisons.

This means property rates have beaten inflation and more than doubled in the last 15 years, with inflation increasing by an average of 5.1% per year over the same period.

What’s worse is that the increase in these essential services is on an increasing trajectory.

A five-year analysis of Stats SA’s data from 2019 to 2024 shows electricity tariffs outpaced water and property rates, growing by an average of 11.2% per year.

This is compared to an average of 5% per year of inflation.

However, a more in-depth comparison of water and electricity prices in South Africa paints a far worse picture.

Over the period 1996 to 2024, electricity tariffs increased almost five times faster than inflation and water tariffs increased almost six times faster than inflation.

In the meantime, the trend of financially driven home sales serves as a stark reminder of the challenges many households face.

It underscores the need for targeted interventions, both at a policy level and through support mechanisms for distressed homeowners.

Without meaningful action, the ripple effects of this crisis may continue to strain the housing market and the broader economy, leaving many South Africans with limited avenues for financial stability.

Read: What you need to earn to buy houses in the best-run municipalities in South Africa