The homes you can afford on the average salary in South Africa right now
The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) recently hiked the repo rate to 6.25%, taking the domestic prime lending rate to 9.25% – making borrowing money from a bank to finance a home even more expensive.
Before a prospective homeowner is granted a loan for a home, a number of factors need to be taken into account: the take-home pay of the person and the size of the deposit. Knowing if a home is affordable prior to looking into a prospective property can ensure that you do not waste time or money.
The latest salary data from Statistics South Africa shows what workers are getting paid across the various economic sectors in the country. Stats SA revealed that average monthly earnings paid to employees in the formal non-agricultural sector saw a quarter-on-quarter increase of 3.7% from R23,697 in February 2022 to R24,578 in May 2022.
Using the rule of thumb that your bond repayment should be equal to around a third of this amount, the prospective homeowner would need to pay R8,192 per month towards their bond. With this in mind, a solo buyer in the current market would generally be looking at a home priced around R780,000.
By using both Old Mutual’s Personal Income Tax Calculator for 2022/23 alongside BetterBond’s affordability calculator, BusinessTech was able to see how much the average South African working in the formal sector could afford as a home and what it could look like:
Note: Calculations are based on a prime lending rate of 9.75% and assume that the bond repayment period is 20 years. Interest rates will vary, and so with the price of housing.
| Gross Income | Net income | Monthly repayment | Loan amount |
|---|---|---|---|
| R17 000 | R15 300 | R5 600 | R540 000 |
| R24 570 | R21 000 | R8 192 | R780 000 |
| R32 000 | R26 400 | R10 600 | R1 012 000 |
| R50 000 | R38 300 | R16 600 | R1 580 000 |
| R100 000 | R68 300 | R30 300 | R3 160 000 |
R540,000
1 Bedroom Apartment / Flat for Sale in Marshalltown – R520,000
2 Bedroom House for Sale in Ridgeway – R520,000
R780,000
2 Bedroom House for Sale in Johannesburg Central – R779,200
2 Bedroom Apartment / Flat for Sale in Alveda Johannesburg – R765,000
R1,012,000
1 Bedroom Apartment / Flat for Sale in Essenwood – R995,000
R1,580,000
2 Bedroom Apartment / Flat for Sale in Riviera Johannesburg – R1,440,000
2 Bedroom House for Sale in Melville, Johannesburg – R1,550,000
R3,160,000
2 Bedroom House for sale in Parkhurst Johannesburg – R3,100,000
2 Bedroom Apartment / Flat for Sale in Sea Point – R3,000,000
Read: New laws coming for driving licence testing centres in South Africa
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