Buying a home in South Africa can be a daunting task, especially in the Western Cape, where the cost of property is the highest in the country.
With an average home price of R1.6 million, you’ll need a monthly salary of just over R58 000 to afford a house here – nearly double the amount required in other provinces, Cape {town} Etc reports.
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The latest Residential Property Price Index (RPPI), developed by Statistics South Africa (Stats SA) and the South African Reserve Bank (SARB) contains information on:
- Properties sold for the first time
- Resold properties
- Sectional title properties
- Freehold properties
It aims to measure ‘the rate at which the prices of residential properties purchased by households are changing over time. Both new and existing dwellings are covered if available, independently of their final use and their previous owners. Only market prices are considered. They include the price of the land on which residential buildings are located’.
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According to the report, residential property prices have increased by 23.8% over the last five years, equating to an annual increase of 4.8%. Furthermore, some provinces experienced higher property price growth than others, including the Western Cape.
In this province, property prices surged by 35.5%. The least growth was recorded in the Northern Cape with a mere 0.9%.
When adjusted for inflation, real estate prices have fallen by 3.9% nationwide. This period saw a 27.7% rate of inflation, indicating a drop in property values in most provinces.
Even after adjusting for inflation, the average cost of a home in South Africa is still above what the typical formally employed worker outside agriculture earns.
Harcourts South Africa CEO Richard Gray points out that banks generally prefer mortgage payments to be no more than 30% of a buyer’s gross monthly income as it helps ensure that homeowners can handle their repayments without compromising their overall financial well-being.
BusinessTech calculated the salary needed to buy an average home in each province using the 30% guideline. These figures are based on a 20-year mortgage at an interest rate of 11.75%, using Absa’s bond calculator.
The publication sourced property prices from Property24 which compiled more than 190 000 property sales registered with the deeds office in 2024 to date.
The average price for a home in South Africa is currently R972 200, which means an individual or household would have to earn about R35 120 per month to afford it.
This equates to R8 329 more than the average salary of R26 791 earned by formally employed workers outside of the agricultural sector.
The cost remains high across the board as is seen in the Free State, where the lowest average house price was recorded at R800 000. Here, you will need to earn R28 900 per month – still more than the average salary.
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