South Africans set to get wealthier in next eight years

Finance Minister Pravin Gordhan has repeatedly raised concerns about high levels of indebtedness in the country. (David Harrison, M&G)

Finance Minister Pravin Gordhan has repeatedly raised concerns about high levels of indebtedness in the country. (David Harrison, M&G)

South Africans who are battling to make ends meet will be encouraged by research forecasting a 12.5% average annual growth in household wealth over the next eight years.

CoreData Research, the Cape Town arm of a global specialist financial services research and strategy consultancy, expects the average yearly income to more than double from R72 000 in 2011 to R168 000 by 2020.

This means people will have more money to save or invest, which would please Finance Minister Pravin Gordhan, who has repeatedly raised concerns about high levels of indebtedness in the country.

In its latest study, titled South African Household Saving Outlook 2013, CoreData said gross household wealth will grow from R670 000 a year to R1-million a year by 2020.

Kapila Gohel, senior consultant at CoreData South Africa, said: "In the next eight years people will be moving to higher bands of wealth, creating pools of disposable income that can be saved or invested, and saving will also become [more] feasible."

The wealth of people aged 31 to 45 and 46 to 60 (pre-retirees) in particular is likely to increase dramatically "and the appetite for short- and long-term savings products, securities investments and mortgages will grow as a result", the company said.

In 2011, the 31 to 45 age group gathered a pot of savings that includes pensions, stokvels and insurance contributions worth R385-billion, which is expected to increase to R945-billion in the next eight years.

Total accumulated savings of pre-retirees alone was R720-billion that year, and is projected to rise to R1.5-trillion by 2020.

"Current pension funds and long-term insurance are the highest ­portion of gross household wealth, followed by nonfinancial assets such as property, then other financial assets including securities and assets with monetary institutions," the study said.

Secured debt is estimated to form the majority of gross household debt by 2020, "suggesting that the appetite for mortgages is likely to pick up in the next seven years", it said.

"Pension funds and insurance should remain the highest portion of gross household wealth … however, the portion of wealth in financial assets such as securities will become larger, implying investors will take more of an interest in securities investments over the next few years."

The accumulated savings figures were calculated by CoreData Research using a savings model based on data from the South African Household Survey, collected by Statistics South Africa.

Gohel said the variable of race was not included in this report, which focuses on household savings projections only for age groups, but "this is something CoreData Research will be looking at in future".

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