Open Access Journal Article

Interactive influence of house prices and the repo rate on household debt in South Africa

by Juniours Marire a,* orcid
Department of Economics and Economic History, Rhodes University, Grahamstown, South Africa
Author to whom correspondence should be addressed.
JEA  2024, 46; 3(1), 46;
Received: 7 June 2023 / Accepted: 7 July 2023 / Published Online: 2 March 2024


The recent interest rate policy decisions of the South African Reserve Bank have been criticized significantly by left-leaning political parties and civic society organisations for being anti-poor, anti-labour, and pro-capital because of their implications for household debt. Existing literature has established that interest rates and house prices are insignificant determinants of household debt dynamics in South Africa. Taking advantage of additional data for the period 2013-2022, and contrary to the previous studies, the paper maintains that house prices and the central bank policy rate play a crucial role in household debt dynamics. Applying a Markov Switching regression to quarterly data for the period 1981Q1 to 2022Q1, the paper finds that house prices and the policy rate have a significant influence on household debt dynamics. It establishes the existence of a ‘house price boom, low policy rate burden’ regime and a ‘high policy rate burden, low house price’ regime. The coexistence of the ‘house price boom’ and the ‘low policy rate’ explains the debt euphoria characterised by significant household leveraging.

Copyright: © 2024 by Marire. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
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ACS Style
Marire, J. Interactive influence of house prices and the repo rate on household debt in South Africa. Journal of Economic Analysis, 2024, 3, 46.
AMA Style
Marire J. Interactive influence of house prices and the repo rate on household debt in South Africa. Journal of Economic Analysis; 2024, 3(1):46.
Chicago/Turabian Style
Marire, Juniours 2024. "Interactive influence of house prices and the repo rate on household debt in South Africa" Journal of Economic Analysis 3, no.1:46.
APA style
Marire, J. (2024). Interactive influence of house prices and the repo rate on household debt in South Africa. Journal of Economic Analysis, 3(1), 46.

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