Get Started

Tag: Personal Finances

Seaside village homes and lifestyle estates: The shift in property prices

Property Prices

By Koketso Mamabolo The latest property numbers present a fascinating insight into how demand is being shaped by more than just affordability. In May this year, StatsSA released its Residential Property Price Index, the yardstick which measures how the price of residential properties changes at the national, provincial and metropolitan levels, revealing how prices continue to rise.  Annual national inflation was sitting at 6.1% in May, up from 5.8% in April. The biggest contributor was the Western Cape with 9.4%. At the metro level Cape Town contributed the most at 8.1%. But this doesn’t mean buyers have lost their appetite. The numbers for properties sold to first-time buyers increased by 4.4% year-on-year, evidence that there is still fresh demand despite higher headline prices.  The same is true over the long term. According to BetterBond’s Property Insights, the average home price has increased by 10.7% since 2019. The average home now costs R1.6-million. And yet, since the fourth quarter of 2023 the number of home loan applications has gone up by 26%.A lower prime lending rate and five successive cuts to the repo rate have driven the 14.6% year-on-year increase in applications. Economists expect inflation to remain at the lower end of the Reserve Bank’s target making it likely that the growth will continue. With lower borrowing costs the narrative has shifted toward a buyer’s market, at least for the moment. Growth rates for all buyers are lower than the Consumer Price Index and right now residential property is a sound investment and the Western Cape is leading the way. The Western Cape accounts for 38 percent of the value of residential building plans passed in the country nationally, and the province has recorded double digit figure year-on-year growth.  “The Western Cape has shown greater property appreciation and higher rental yields than the rest of the country due to semi-migration,” says Marc Rodrigues of the Delta Property Group.“The province experienced a surge in demand as remote work increased and people moved to towns that are well run.” While the beaches and mountain views remain powerful draw cards, people are also looking for service delivery, schools, retail centres, gyms etc. In short, they’re looking for a lifestyle. Whether that be a home in the city, or a holiday home on the coast of a world-renowned tourist destination. Scarborough is an interesting example which highlights a significant trend that is somewhat unique to the Western Cape. The seaside village recorded almost 70 percent of purchases in 2024 by foreign buyers, according to Lightstone Property. The same is true across the province, and these properties are well above the R1.6-million national average. More than 40 percent of the residential property purchases above R10-million were made by foreign buyers, and the top 22 suburbs in the country favoured by foreign buyers are all in the Western Cape.  Couple this with the rise of the digital nomads and semi-migration and it’s clear why developers are not holding back. Cape Town’s CBD is reaping the benefits. Current estimates by the Cape Central Improvement District value investment at just over R9-billion across 27 developments at various stages. Forty four percent of those projects are residential, and seven are mixed-use, highlighting the demand for urban living, not just little paradises on the Atlantic seaboard.  The country’s largest metropolitan area, Johannesburg, has seen success in gated communities with the perks they bring. Property developer Paul Tedder has found a similar demand for lifestyle-focused properties in the south coast of KwaZulu-Natal, as semi-migration from the province’s north coast picks up due to various factors. “The value proposition of gated communities is undeniable. They offer peace of mind and sense of community that many buyers now prioritise,” explains Tedder. When buyers are chasing scenery, rental yields or a lifestyle pivot to remote-friendly towns, they look to the coast. For those looking to settle in the city or its outskirts, Cape Town’s CBD offers many options, with more to come, and the suburbs of Johannesburg remain a compelling option for the schools and proximity to the heartbeat of the country’s economy. Buyers have more options and Marc Rodrigues advises sellers to price homes correctly to avoid losing out.  Sources: BetterBond Property Brief | StatsSA RPPI | Lightstone Property | The State of Cape Town Central City Report

How to avoid the debt trap as a young professional

By Christiaan Coetzee Starting your professional journey is exciting; a steady income, financial independence, and the ability to finally say yes to things you’ve been putting off. But with this newfound freedom comes responsibility, especially when it comes to credit. South African youth are increasingly vulnerable to debt traps, often lured by the promise of “buy now, pay later” without fully understanding the consequences. Recent data indicates a significant uptick in credit usage among young South Africans. According to TransUnion’s Q2 2024 Industry Insights Report, the number of credit-active consumers grew by 4.7% year-over-year to 18.5 million, with Millennials and Gen Z accounting for 62% of new credit originations during the quarter. Notably, Gen Z’s share of new credit card accounts increased by 22.7% year-over-year.  While access to credit can be a powerful tool for building a financial future, it also poses risks if not managed carefully. The same report highlights that 33% of consumers intend to apply for a new personal loan in the next 12 months, indicating a growing reliance on credit to manage day-to-day expenses. Understanding how to navigate this credit landscape is crucial to avoid falling into debt traps that can hinder your financial goals. 5 practical strategies to stay out of the debt trap 1. Grasp the full cost of credit Credit isn’t free money. Whether it’s a credit card, clothing account, or personal loan, each comes with interest rates, initiation fees, and service charges that can accumulate quickly. For instance, a personal loan from a non-bank lender carries a delinquency rate of 40.6%, indicating higher risk and potential cost.  Before committing to any credit agreement, request a detailed breakdown of the total repayment amount and compare it to the cash price to understand the true cost. 2. Live within your means It’s tempting to upgrade your lifestyle with your first paycheck with new gadgets, trendy clothes, more outings, or a fancy car. However, succumbing to lifestyle inflation can lead to overreliance on credit. The TransUnion Consumer Pulse Study found that 52% of consumers have cut back on discretionary spending, indicating a need to prioritize essential expenses.  Consider implementing the 50/30/20 rule. Allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayments. 3. Build and stick to a budget Budgeting empowers you to take control of your finances by providing a clear picture of your income and expenditures. With the rising cost of living, many South Africans are turning to credit to manage expenses.  Utilise budgeting tools or apps to track your spending and identify areas where you can cut back, ensuring you live within your means. 4. Monitor your credit score Your credit score influences your ability to secure loans, rent apartments, and even affects employment opportunities. Clear Score, for example, offers one free credit report annually, allowing you to monitor your financial health.  Ensure to regularly check your credit report to identify errors or signs of identity theft and take steps to improve your score by paying bills on time and reducing outstanding debts. 5. Seek help before it’s too late If you’re struggling with debt, you’re not alone. The National Credit Regulator reported that 18.1 million people applied for credit in Q3 2024, a 3% increase from the previous quarter.  You can reach out to organisations like FinFix for financial education workshops, one-on-one credit coaching, and practical tools to help you manage and overcome debt. Empower your financial future Credit, when used responsibly, can be a valuable asset in building your financial future. However, mismanagement can lead to long-term debt and financial stress. By understanding the true cost of credit and monitoring your credit score, you can avoid the debt trap and achieve financial stability. Consider speaking to a registered financial adviser who can help you structure a plan tailored to your income, goals, and debt profile.  This professional guidance can make a significant difference in your long-term financial journey. And remember, you’re not alone, start watching YouTube videos or listening to podcasts to find out how your peers are managing their finances. Learning from real stories and relatable experiences can be just as powerful. Christiaan Coetzee is the CEO of FinFix.

Understanding your credit score

By Jessie Taylor More and more South African consumers are accessing credit, according to the National Credit Regulator (NCR). The NCR highlights that the number of consumers with credit agreements has grown, particularly in the first quarter of 2025. As of this period, around 25.8 million credit agreements were in place, with a significant number of consumers holding multiple types of credit. While many individuals rely on credit to manage their finances, there are concerns about the impact of rising debt levels on consumer financial stability. This highlights the need for responsible borrowing, and one tool consumers can use to monitor their credit is their credit score. The basics A credit score is an essential financial tool that reflects your ability to repay debt and manage credit. It’s a number that lenders and financial institutions rely on to assess the risk of lending you money. In South Africa, credit scores generally range from 300 to 850, with higher scores indicating a stronger credit history and a greater likelihood of securing financial products, such as loans and credit cards. However, understanding your credit score and knowing how to improve it can be pivotal for achieving financial stability and unlocking better opportunities. The key factors that influence your credit score include: A credit score differs from a credit report. Your report is a detailed record of your credit activity and contains information about your credit accounts, such as loans, credit cards, and payment history. It also includes details of any defaults or collections on your accounts. Your credit score is a snapshot of your financial behaviour, whereas the credit report provides a comprehensive view of your credit history. To improve your credit score, it’s crucial to monitor both, ensuring that your report is accurate and up to date. In South Africa, checking your credit score is relatively simple. Several services, including financial institutions and credit bureaus, provide access to your credit score at no cost. You can also request a credit report directly from the main credit bureaus. South African regulations allow you to request one free credit report per year from each of the major credit bureaus, ensuring you have access to your information and can address any issues promptly. How to achieve a good credit score A good credit score is key to accessing a wide range of financial products and securing favourable interest rates. It can also signal financial reliability to potential lenders, making you an attractive candidate for loans, credit cards, and even rental agreements.  Here are some essential tips to help you build and maintain a good credit score: Pay your bills on time Timely payment is crucial to maintaining a healthy credit score. Payment history is the most influential factor in your credit score, making up about 35% of the calculation. Late or missed payments can significantly impact your score, so staying on top of payment deadlines is essential. Set reminders or automate payments to avoid late fees and potential damage to your credit score. Keep your credit utilisation low Credit utilisation accounts for 30% of your credit score, so keeping your credit card balances well below your credit limit is important. Financial experts recommend keeping your utilisation under 30%. For example, if your credit limit is R10 000, aim to keep your balance below R3 000. A lower credit utilisation rate shows lenders that you are managing your credit responsibly. Maintain a long credit history The longer your credit history, the more insight lenders have into your financial behaviour. The length of your credit history makes up about 15% of your credit score. If you’ve had credit accounts for several years, your score is likely to reflect this stable financial background. Keep older accounts open, even if you’re not actively using them, to maintain a longer credit history. Diversify your credit types A healthy mix of different credit types, such as credit cards, retail accounts, and loans, can contribute positively to your credit score, accounting for around 10%. Having a diverse credit profile signals to lenders that you can manage various types of credit responsibly. However, don’t open unnecessary accounts just for the sake of variety; only apply for credit you truly need. Limit hard credit inquiries Each time you apply for credit, a hard inquiry is made, which can slightly lower your score. Multiple hard inquiries in a short period can make you appear financially unstable, potentially lowering your score. Limit credit applications to avoid unnecessary hits on your score. Soft inquiries, such as when you check your own credit score, do not affect your score. Building and maintaining a good credit score is an essential step in achieving financial well-being. It opens doors to favourable loan terms, lower interest rates, and better financial opportunities. Understanding the factors that influence your credit score and regularly checking both your score and your credit report will put you in a better position to manage your finances effectively. Sources: Old Mutual  |  Standard Bank  |  Investec  |  National Credit Regulator