Luxury items on offer as rich also feel pinch

ROLEX watches, large diamonds, beautiful brass saxophones and art works by William Kentridge and Walter Battiss are popping up in pawnshops as the middle class and even the rich feel the pinch.

Business had picked up in the past seven months, Perfect Pawn director David Swanepoel said. "The run-of-the-mill daily stuff is not as common anymore. We see more luxury items coming in."

Executive Traders owner Jenny Dinham has been in the pawn shop business for 27 years. "I can't really remember a time before this when we saw this sort of behaviour," she says.

Consumers are tightening their belts as fuel and electricity costs have been rising faster than their incomes, and credit has become more expensive.

The Reserve Bank raised interest rates in January and in July. Most economists in a Bloomberg poll last week said rates would rise again in January. A survey by Unisa and debt management agency MBD released last week showed that nearly three-quarters of South Africans do not feel financially secure.

And some of the higher- income earners are in even worse shape than the average.

Four out of five people earning R360000 to R480000 a year feel either financially vulnerable or financially exposed. "I see people are often pawning items more from necessity. They are more willing to part with goods to make sure there is food on the table, rather than to facilitate their lifestyles," Swanepoel said.

South African consumers went on a credit- spending binge over the past decade.

But rising interest rates and stricter lending criteria are now forcing many to scale down to service their debt.

Cash Crusaders marketing manager Alaine Rossouw said that in general the second-hand market would always do well in economically turbulent times.

As more people were pawning items, more people were also buying second-hand.

The items sold by the middle and upper class (their downgrades) were being bought by the lower-income class (as an upgrade), Rossouw says.

Dinham said her clients used to be mainly lower-income earners, but more middle- and higher-income clients were now coming to pawn items.

"We are getting better-quality stock. We have had paintings from Walter Battiss and William Kentridge, so we are beginning to get higher-end products."

Besides the paintings, Dinham has also seen large diamonds, antiques, collectable coins and prized musical instruments. - Dominic Skelton and TJ Strydom