Houses you can afford on the average salary in South Africa – Western Cape vs Gauteng vs KZN

·2 Jul 2023

Currently, the average monthly salary in South Africa stands at R25,304, which, based on the recommended bond threshold by banks, allows an average earner to afford a home valued at between R700,000 and R1,400,000 – depending on how many earners per household.

According to the latest quarterly employment survey (QES) published by Stats SA, the average salary in South Africa decreased by 2.7% from the previous quarter to R25,304 from R26,002 per month.

The decline resulted as total gross earnings paid to employees decreased by 4,0% from R864.2 billion in December 2022 to R830,0 billion in March 2023.

This was largely due to decreases in industries such as trade, community services, manufacturing, construction, transport and electricity.

Data published by The University of Cape Town’s Liberty Institute of Strategic Marketing showed that a household needs to earn around R22,000 to be considered middle class in South Africa.

This would mean that the average formally-employed non-agricultural worker in the country would fit into that class category.

The price you can afford

According to Harcourts South Africa CEO Richard Gray, a trend that underscores the financial cautiousness of South African home buyers and banks alike is a clear preference among banks for lending to home buyers where the cost of the monthly bond is no more than 30% of your single or joint gross monthly income.

“The 30% income threshold for home loans has been a common measure of loan affordability among South African banks, with institutions such as SA Homeloans stating that they will not approve a home loan if the repayments exceed this percentage of a borrower’s single or joint gross monthly income,” he said.

“Adherence to the 30% guideline ensures that home buyers maintain a balanced financial portfolio, allowing room for other expenses and savings,” he added.

Gray noted that this threshold is important, as it also leaves room for making additional payments into a home loan account every month, as this can significantly reduce the final cost of the home loan and decrease the payment period.

Considering this, BusinessTech estimated the price of a property one or two individuals – assuming you have a partner – could afford on the average salary in South Africa.

To calculate this, we used FNB’s bond calculator, assuming a home loan period of 20 years at an interest rate of 11.75%.

Based on these assumptions, the table below outlines the price and monthly bond repayment amount one or two individuals could afford on the average salary in South Africa.

No. of earners per household	Gross monthly income	Max. property value	Monthly repayment amount
One	R25 304	R700 000	R7 591
Two	R50 608	R1 400 000	R15 182

Using these figures, we then looked at various properties currently on the market at these price points in the Western Cape, Gauteng, and Kwa-Zulu Natal – to give you an idea of what you’d be looking at.

These property examples are listed below.

Western Cape

One income earner