{"id":807424,"date":"2025-01-23T08:26:13","date_gmt":"2025-01-23T06:26:13","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=807424"},"modified":"2025-01-23T08:26:19","modified_gmt":"2025-01-23T06:26:19","slug":"the-house-and-car-the-average-government-employee-can-afford-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/trending\/807424\/the-house-and-car-the-average-government-employee-can-afford-in-south-africa\/","title":{"rendered":"The house and car the average government employee can afford in South Africa"},"content":{"rendered":"\n

The average government employee can afford a house worth between R1.8 million and cars worth up to R372,000.<\/p>\n\n\n\n

The average public-service employee in South Africa earns R41,200 per month\u2014a figure that surpasses the national average, which includes the private sector, by R14,400.<\/p>\n\n\n\n

This stark wage disparity, highlighted in the 2024 compensation and employment data from the National Treasury, is not a recent phenomenon.<\/p>\n\n\n\n

Since at least 2019, the average government salary has consistently exceeded the national average by over R10,000, underscoring the premium placed on public-sector remuneration.<\/p>\n\n\n\n

According to the Treasury, the significant gap between public-sector and national wages is largely attributed to the government\u2019s historical efforts to attract and retain skilled professionals in critical sectors such as healthcare, education, social welfare, and security.<\/p>\n\n\n\n

Over the past 30 years, public-service remuneration structures have undergone extensive reforms, with competitive salaries and a broad array of benefits forming the cornerstone of these efforts.<\/p>\n\n\n\n

These benefits include pensions, medical and housing subsidies, bonuses, and allowances, all of which contribute to the elevated average monthly earnings of government employees.<\/p>\n\n\n\n

Treasury data confirms that the average government salary not only exceeds the national average but also places the typical public-service worker among the top 10% of income earners in South Africa, according to the World Inequality Database<\/a>.<\/p>\n\n\n\n

In contrast, according to Treasury\u2019s comparative data, formally employed non-agricultural workers (which includes the private sector) earn an average of R26,800 per month.<\/p>\n\n\n\n

Since 2019, public service earnings have consistently been at least 50% higher than the national average.<\/p>\n\n\n\n

This trend has been further amplified by the introduction of occupation-specific dispensations (OSDs) in 2007, which were designed to retain skilled professionals through targeted increases in wages and benefits.<\/p>\n\n\n\n

However, while these measures have succeeded in making public-sector jobs attractive, they have also led to an unsustainable wage bill that now consumes a significant portion of the national budget.<\/p>\n\n\n\n

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House<\/strong><\/h2>\n\n\n\n

According to Richard Gray, CEO of Harcourts South Africa, banks clearly prefer lending to home buyers whose monthly bond cost is no more than 30% of their single or joint gross monthly income.<\/p>\n\n\n\n

This 30% income threshold for home loans has been a common measure of loan affordability among South African banks.<\/p>\n\n\n\n

For instance, institutions like SA Homeloans have stated that they will not approve a home loan if the repayments exceed this percentage of a borrower\u2019s single or joint gross monthly income.<\/p>\n\n\n\n

Gray emphasised that adhering to the 30% guideline ensures that home buyers maintain a balanced financial portfolio, allowing room for other expenses and savings.<\/p>\n\n\n\n

Gray also noted that this threshold is important because it also leaves room for additional monthly payments to be made into a home loan account.<\/p>\n\n\n\n

This can 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 \u2013 assuming you have a partner \u2013 could afford on the average salary in South Africa.<\/p>\n\n\n\n

To calculate this, we used Absa\u2019s bond calculator<\/a>, assuming a 20-year home loan period at an interest rate of 11.25%.<\/p>\n\n\n\n

Based on these assumptions, the table below outlines the price and monthly bond repayment amount that the average government worker can afford.<\/p>\n\n\n\n

Using these figures, we then looked at various properties currently on the market at these price points.<\/p>\n\n\n\n

Gross income
(monthly)<\/th>		Max. property
value<\/th>		Monthly
repayment<\/th><\/tr><\/thead>
R494,400
(R41,200)<\/td>		R1,178,000<\/td>R12,360<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n

3 Bedroom Apartment in Ennerdale \u2013 R1,148,000<\/strong><\/p>\n\n\n\n

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Car<\/strong><\/h2>\n\n\n\n

Industry experts still recommend that prospective buyers shouldn\u2019t spend more than a quarter (25%) of their monthly income on vehicle-related costs, including:<\/p>\n\n\n\n