The houses you can afford on the average salary in South Africa

 

Before applying for a home loan, buyers need to run through a series of checks to assess whether the property of their dreams is affordable. Determining the right price range is an essential first step to avoid wasting time when looking for properties.

The bond that prospective homeowners will be able to afford depends on a number of factors, including take-home pay, and the size of the deposit.

For those in formal employment in South Africa, the current average nominalised monthly take-home pay is R15,042, while in real terms, the average take-home pay is closer to R12,412. Take-home-pay – also known as disposable income – is the number that prospective home buyers should use to work out the price of the home they can afford.

Using the rule of thumb that your bond repayment should be equal to around a third of this amount, or between R5,000 – R6,000, a solo buyer in the current market would generally be looking at a home priced between R600,000 – R700,000 Property24’s affordability calculator shows. This factors in an interest rate of 7.5% and a bond repayment period of 20 years.

While these calculations are a helpful starting point, they do not tell the full story, as buyers who can pay a deposit will obviously be able to buy higher-priced properties.

Additionally, couples who are buying a home together can use their total household disposable income to gauge how much they can afford to pay on a bond.

If they are both earning the average take-home salary, for example, and only have one set of expenses and few additional costs to pay, they will likely be able to afford a home in the R1.3 million+ price range.

The below shows the types of homes you can buy in the Western Cape, KwaZulu-Natal, and Gauteng based on the above values.