Despite growing optimism around household finances and quicker debt repayment compared to earlier this year, South African consumers are increasingly worried about rising housing costs.

This insight comes from TransUnion’s latest Consumer Pulse Study for Q3 2024.

With signs of stability in the local economy and GDP growth expected to hit 1.3% this year, there is cautious optimism, particularly following inflation’s drop to a three-year low of 4.6% in July 2024.

Many economists anticipate an interest rate cut before year-end, contributing to a more positive outlook for the market.

According to TransUnion, 76% of consumers expect their incomes to rise in the next year, up from 70% in the same period last year. Additionally, 73% are optimistic about their household finances for the next 12 months, a seven-point increase year-over-year.

Over the three months leading up to the survey, 39% reported an increase in income, compared to 36% in the same period the previous year.

“Even though increasing consumer optimism is a promising indicator of economic recovery, it is essential not to diminish the financial challenges that many South African households continue to face,” said Fatgie Adams, head of Credit Risk Solutions at TransUnion Africa.

Some of the key concerns for households over the next six months include inflation for everyday goods (38%) and jobs (20%).

Housing prices, which worry 12% of consumers, have increased as a concern by three percentage points from the previous quarter, highlighting ongoing challenges in accessing affordable housing and managing debt.

“While the easing of inflationary pressures and potential interest rate cuts provide a glimmer of hope, the rising cost of housing remains a significant concern for many South Africans,” said Adams.

“Our latest Consumer Pulse Study highlights that even as household income expectations improve, the affordability of housing continues to be a critical issue that requires attention.”

Financial challenges persist

Despite increasing optimism, many consumers are still struggling with their financial obligations. The study found that 36% of consumers do not expect to fully pay at least one of their current bills or loans, a slight improvement from 37% in Q2 and 38% year-over-year.

Among those unable to meet their commitments, 38% plan to pay what they can, while others intend to borrow from friends or family (24%), and 9% are uncertain about how they’ll manage.

“Our findings show that while some consumers are seeing income growth, the struggle to meet monthly obligations is still very real for more than a third (36%) of respondents,” said Adams.

“This indicates that economic recovery is uneven and that many households are still operating under significant financial stress.”

Regarding household spending, over half of consumers (52%) reported cutting back on discretionary spending like dining out, travel, and entertainment over the past three months.

Additionally, 28% cancelled subscriptions or memberships during this period.