{"id":700233,"date":"2023-07-02T15:00:00","date_gmt":"2023-07-02T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=700233"},"modified":"2023-06-30T16:23:20","modified_gmt":"2023-06-30T14:23:20","slug":"houses-you-can-afford-on-the-average-salary-in-south-africa-western-cape-vs-gauteng-vs-kzn","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/700233\/houses-you-can-afford-on-the-average-salary-in-south-africa-western-cape-vs-gauteng-vs-kzn\/","title":{"rendered":"Houses you can afford on the average salary in South Africa – Western Cape vs Gauteng vs KZN"},"content":{"rendered":"\n

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 \u2013 depending on how many earners per household.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

This was largely due to decreases in industries such as trade, community services, manufacturing, construction, transport and electricity.<\/p>\n\n\n\n

Data published by The University of Cape Town\u2019s Liberty Institute of Strategic Marketing showed that a household needs to earn around R22,000 to be considered middle class in South Africa.<\/p>\n\n\n\n

This would mean that the average formally-employed non-agricultural worker in the country would fit into that class category.<\/p>\n\n\n\n

The price you can afford <\/strong><\/p>\n\n\n\n

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\u200b\u200b.<\/p>\n\n\n\n

“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\u200b\u200b,” he said.<\/p>\n\n\n\n

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

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\u200b\u200b. <\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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

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.<\/p>\n\n\n\n

No. of earners per household<\/th>Gross monthly income <\/th>Max. property value<\/th>Monthly repayment amount<\/th><\/tr><\/thead>
One<\/td>R25 304<\/td>R700 000<\/td>R7 591<\/td><\/tr>
Two<\/td>R50 608<\/td>R1 400 000<\/td>R15 182<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n

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 \u2013 to give you an idea of what you’d be looking at. <\/p>\n\n\n\n

These property examples are listed below.<\/p>\n\n\n\n

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Western Cape<\/strong><\/p>\n\n\n\n

One income earner<\/strong><\/p>\n\n\n\n