What you need to earn to buy houses in the best-run municipalities in South Africa
Based on average house prices, one would need to earn between R33,000 and R76,500 per month to afford to buy a home in South Africa’s best-rin municipalities.
Recent assessments by Ratings Afrika have highlighted Mossel Bay and Midvaal as South Africa’s top-performing municipalities.
They used a scoring system that evaluates six critical factors: operating performance, liquidity management, debt governance, budget positioning, affordability, and infrastructure development.
These municipalities scored impressively, with both achieving 74 out of 100 in terms of financial sustainability.
Three additional Western Cape municipalities—Saldanha Bay, Swellendam, and Swartland—also ranked highly, securing scores between 71 and 73.
The Mossel Bay Municipality has been recognised for its consistent performance and high levels of financial management, and it is sharing the top spot with Midvaal.
Mossel Bay has demonstrated strong fiscal discipline and sustainable development, which contribute to its positive reputation.
Midvaal, located just south of Johannesburg, stands out as Gauteng’s only municipality to receive a clean audit from the Auditor-General (AG), a distinction it has maintained for an impressive 10 consecutive years.
Midvaal’s achievement is particularly noteworthy as only 34 municipalities nationwide earned clean audits in the latest review, with 20 of these located in the Western Cape, including Mossel Bay.
House prices and affordability in these well-managed municipalities vary significantly.
According to data from Property24, Mossel Bay has seen 1,847 home sales in 2024, with an average selling price of R2.15 million.
Housing prices in Mossel Bay span a wide range, from approximately R1.72 million for a one-bedroom apartment to as much as R5.5 million for larger properties with five or more bedrooms.
By contrast, Midvaal remains considerably more affordable.
In 2024, there have been 696 property sales, with an average price of R940,000. Prices in Midvaal range from R660,000 for smaller one-bedroom apartments to about R2.7 million for more spacious full-title homes with five or more bedrooms.
How much you need to earn
When evaluating how much one would need to earn to buy property in these areas, financial experts recommend a rule of thumb that mortgage payments should not exceed 30% of the borrower’s gross monthly income.
Richard Gray, CEO of Harcourts South Africa, explains that banks typically prefer lending to buyers within this income threshold, ensuring that home loan payments do not overextend borrowers’ finances.
This 30% standard is upheld by many financial institutions, including SA Homeloans, which generally will not approve a loan if repayments surpass this percentage of a borrower’s income.
Gray emphasizes the importance of this threshold for maintaining financial balance, allowing homeowners to manage other expenses and build savings while repaying their loans.
Adhering to this guideline allows borrowers to make additional payments on their home loan when possible, which can significantly reduce the loan’s overall cost and shorten the repayment term.
Using this 30% income threshold, BusinessTech has estimated the income needed to afford homes in both Mossel Bay and Midvaal.
For the average home in Midvaal, with a cost of R940,000, an income of approximately R33,413 per month or R400,956 per year would be needed to comfortably manage the monthly bond repayments.
In Mossel Bay, where the average home price is much higher at R2.15 million, a prospective homeowner would need to earn around R76,430 per month or R917,160 annually.
These calculations assume a 20-year mortgage with no down payment at the current interest rate of 11.5%.
These figures underscore the affordability gap between South Africa’s top municipalities, shaped by their differing housing markets.
While Midvaal offers a more accessible entry point for homeownership, Mossel Bay’s high property prices reflect the desirability and robust financial management of the area.
For prospective homeowners, these two municipalities represent contrasting options, both boasting strong governance and infrastructure, yet catering to different income brackets and lifestyle preferences.
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