Household wealth has increased strongly, however this was mainly as a result of a significant increase in the valuations of financial assets, possibly leaving consumers in a financially vulnerable position. House prices in South Africa are fairly valued at present and do not present any risks to financial stability.
Equity market valuations, on the other hand, are currently at fairly elevated levels and a sudden and sharp correction in equity markets could reveal vulnerabilities that could have certain indirect negative effects on the financial system. South Africa has been participating in the FSB’s monitoring exercise of non-bank financial intermediation activities, or shadow banking as it is commonly known, since 2012.