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‘SPENDTHRIFT’ blared the headline in my morning newspaper, the Times. I don’t know about you, but I get rather tired of these finger-wagging headlines (which, after all, set the mood in which you experience the article).
Whenever some research company decides to do a finger lunch and talk about its latest bit of number crunching around what we spend and how much we’re in debt, the end result is A rash of headlines designed to make us all feel bad: SA saves too little, Over-indebted SA and on and on.
Here are some facts quoted in this article:
“Those with less than R3500 a month spend twice as much on cellphones and airtime as on education…” Does this make them a bunch of frivolous care-nothings? No! People on such a low income don’t spend on education because they rely on the education the state provides – free.
They often have few options, in fact: the state primary school is all that’s available, so that’s where their children go (and when a private school finally opens nearby, many parents will do without to afford a better education for their kids).
“When medical aid scheme costs are excluded, households spend four times more on alcohol and tobacco than on medical expenses…” Yes, but how much are those medical aid costs, hmm? Ours is in the stratosphere, a quite significant chunk of our income.
There’s a World Health Organisation that shows we’re a middle-order country when it comes to alcohol consumption, by the way: we drink considerably less (7.5-10 litres a year per capita) than almost all of Europe, which drinks more than 12.5 litres.
It seems to be regarded as a national character flaw that our spend on housing loans has almost halved since 2008. 702 radio host Redi Thlabi seemed, if I heard her right, to say that it was absolutely vital to own your own home.
It’s certainly always been something I aspired to. But that was because, like most people in the working class or lower end of the middle class, I grew up in rented accommodation, and wanted somewhere to live that wasn’t at the whim of a landlord.
Working class home ownership was one in the eye for the landlords, the property owners who, in Victorian Britain for example, represented just 20% of the population but ran the show.
During my growing-up years, home ownership across the world was promoted as the ideal – the property-owning democracy, they call it. Home ownership was thought to be an investment, an instrument of savings, good for the economy, good for encouraging settled communities, and so on – so the more there is of it, surely the better.
“Yet the worldwide crash was bound up in this supposed miracle of social policy. The disaster began with defaults on American subprime mortgages, a financial instrument designed to spread home ownership among the poor. It gathered pace after the failures of Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide cheap home loans.
"As a result, the home-ownership rate in America has fallen for four years, the first time that has happened in a quarter of a century. In 2008, 2.3m families lost their homes or faced foreclosure - double the average before the crisis - reducing the home-ownership rate from 69% in 2004 to 67.5% at the end of 2008.
"The number of owner-occupied dwellings also slipped in Britain in 2007-08 for the first time since the 1950s.” (The Economist, April 16 2009)
Does home ownership make for a more resilient society? Not necessarily: “Take a look at home ownership levels in the EU prior to the current economic crisis and you won’t find that there is a strong relationship to those countries weathering the economic crisis well.
"Instead, there is a surprising correlation to countries with major economic problems (Greece, Ireland, Spain, Belgium and the UK),” wrote Samir Jeraj on opendemocracy.net in July last year. A graph from Shelter 2004 shows home ownership in Greece at over 90%, in Spain at over 80% - and in Sweden at under 40%.
I became a home owner just before the housing bubble took off, when banks were panting to give us 110% finance; this, of course, is no longer true. Even an entry-level townhouse costs well above half a million, and you need a significant deposit plus transfer costs.
So “the shrinking share of home loans in household debt compared to vehicle finance and unsecured loans” (to quote the Times article) is driven in part by changing bank policies making it harder to get a home loan.
But it’s also driven by harsh realities: we all know that the real cost of living has risen by more than the official inflation rate. A while back a certain writer attributed this belief on the part of ‘housewives’ to an improved standard of living, growing households and a poor understanding of compounding inflation.
Patronising, neh? As if us ‘housewives’ wouldn’t notice we were buying salmon instead of hake, or that an extra child had slipped in while we weren’t looking. Meanwhile, only a few can declare that their income has really kept pace.
Following a couple of years of house price deflation, and with house sales and prices still stagnant in many areas, perhaps it’s actually sensible not to devote huge chunks of our income to a home loan?
- Fin24
*Mandi Smallhorne is a versatile journalist and editor. Views expressed are her own.
Whenever some research company decides to do a finger lunch and talk about its latest bit of number crunching around what we spend and how much we’re in debt, the end result is A rash of headlines designed to make us all feel bad: SA saves too little, Over-indebted SA and on and on.
Here are some facts quoted in this article:
“Those with less than R3500 a month spend twice as much on cellphones and airtime as on education…” Does this make them a bunch of frivolous care-nothings? No! People on such a low income don’t spend on education because they rely on the education the state provides – free.
They often have few options, in fact: the state primary school is all that’s available, so that’s where their children go (and when a private school finally opens nearby, many parents will do without to afford a better education for their kids).
“When medical aid scheme costs are excluded, households spend four times more on alcohol and tobacco than on medical expenses…” Yes, but how much are those medical aid costs, hmm? Ours is in the stratosphere, a quite significant chunk of our income.
There’s a World Health Organisation that shows we’re a middle-order country when it comes to alcohol consumption, by the way: we drink considerably less (7.5-10 litres a year per capita) than almost all of Europe, which drinks more than 12.5 litres.
It seems to be regarded as a national character flaw that our spend on housing loans has almost halved since 2008. 702 radio host Redi Thlabi seemed, if I heard her right, to say that it was absolutely vital to own your own home.
It’s certainly always been something I aspired to. But that was because, like most people in the working class or lower end of the middle class, I grew up in rented accommodation, and wanted somewhere to live that wasn’t at the whim of a landlord.
Working class home ownership was one in the eye for the landlords, the property owners who, in Victorian Britain for example, represented just 20% of the population but ran the show.
During my growing-up years, home ownership across the world was promoted as the ideal – the property-owning democracy, they call it. Home ownership was thought to be an investment, an instrument of savings, good for the economy, good for encouraging settled communities, and so on – so the more there is of it, surely the better.
“Yet the worldwide crash was bound up in this supposed miracle of social policy. The disaster began with defaults on American subprime mortgages, a financial instrument designed to spread home ownership among the poor. It gathered pace after the failures of Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide cheap home loans.
"As a result, the home-ownership rate in America has fallen for four years, the first time that has happened in a quarter of a century. In 2008, 2.3m families lost their homes or faced foreclosure - double the average before the crisis - reducing the home-ownership rate from 69% in 2004 to 67.5% at the end of 2008.
"The number of owner-occupied dwellings also slipped in Britain in 2007-08 for the first time since the 1950s.” (The Economist, April 16 2009)
Does home ownership make for a more resilient society? Not necessarily: “Take a look at home ownership levels in the EU prior to the current economic crisis and you won’t find that there is a strong relationship to those countries weathering the economic crisis well.
"Instead, there is a surprising correlation to countries with major economic problems (Greece, Ireland, Spain, Belgium and the UK),” wrote Samir Jeraj on opendemocracy.net in July last year. A graph from Shelter 2004 shows home ownership in Greece at over 90%, in Spain at over 80% - and in Sweden at under 40%.
I became a home owner just before the housing bubble took off, when banks were panting to give us 110% finance; this, of course, is no longer true. Even an entry-level townhouse costs well above half a million, and you need a significant deposit plus transfer costs.
So “the shrinking share of home loans in household debt compared to vehicle finance and unsecured loans” (to quote the Times article) is driven in part by changing bank policies making it harder to get a home loan.
But it’s also driven by harsh realities: we all know that the real cost of living has risen by more than the official inflation rate. A while back a certain writer attributed this belief on the part of ‘housewives’ to an improved standard of living, growing households and a poor understanding of compounding inflation.
Patronising, neh? As if us ‘housewives’ wouldn’t notice we were buying salmon instead of hake, or that an extra child had slipped in while we weren’t looking. Meanwhile, only a few can declare that their income has really kept pace.
Following a couple of years of house price deflation, and with house sales and prices still stagnant in many areas, perhaps it’s actually sensible not to devote huge chunks of our income to a home loan?
- Fin24
*Mandi Smallhorne is a versatile journalist and editor. Views expressed are her own.
