MyBlack^® Wealth

Black middle classes have scope to borrow

Source: Business Report

The First National Bank (FNB) first-quarter survey of estate agents shows the proportion of black buyers at its highest level since the survey question was first asked back in 2005. Similarly, white buyers made up the lowest percentage of total buying since this survey question was first asked. The survey estimate put buying by whites at 44 percent of the total, while buying by blacks was estimated at 34 percent, not that far behind anymore, and a significant jump from the previous quarter’s 53 percent (white) to 28 percent (black). FNB property strategist John Loos says the strong start to this year in the black group’s buying may be due to a combination of last year’s interest rate cuts and this group’s ability to increase borrowing at a faster rate than the white, coloured and Asian groups. This, in turn, could be due to parts of the group being less indebted relative to disposable income than the other population groups’ more established middle classes. “This would partly conflict with a view, held by some, that this ‘emerging’ black middle class had been on a borrowing spree during the boom years, and may be in worse debt shape than other population groups,” Loos says. He says the bank’s “conflicting suspicion” is based on the Bureau of Market Research’s (BMR’s) estimates of the household debt to-disposable income ratio per race group and income band. According to the BMR, the black groups in the income bands of R500 000-R750 000 and R750 000-plus have debt ratios very much in line with the national average for that income segment, having seemingly fully adjusted to the high borrowing/high spending western-style habits of their peers in other race groups.

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