Why property affordability remains a challenge for South Africa's middle class

Property affordability is a challenge for South Africa’s middle class. 

This is given that interest rates remain quite high in South Africa at this stage in the economic cycle, says Elize Kruger, an independent economist.

PayInc, formerly BankservAfrica, launched the PayInc Nett Salary Index, a revamped version of the well-known Take-home Pay Index, on Thursday. The data print features a revised sample and new methodology to deliver deeper insights into South African salary trends and the labour market. 

Tracking the nominal net salaries of an estimated 2.1 million recipients earning between R5 000 and R100 000 per month, the revised PayInc sample for August showed fewer salaries were paid in the higher income range of R40 000 – R100 000 in the first eight months of 2025.

Most salaries were paid in the lower income band of R5 000 – R10 000, followed by a smaller proportion in the R10 000 – R40 000 range.

Middle-class property affordability

Kruger told this publication that it is only the net salaries of just 18.3% of salary earners that would be sufficient to be able to afford a property valued at R1.3million if such a salary earner were the sole owner of the property.  

According to the calculations of an estate agent, for a salary earner to afford a property of R1.3m in value, with a repayment of R13 480 per month over 20 years, based on the prime rate of 11%, the gross income per month of such a salaried person must be R40 000.

She adds that assuming an effective tax rate of 23.1% (for an annual income of R480K), that translates into a net salary (after all deductions) of about R30 000. 

“If two salary earners, like for example a couple, purchase the property together, that would mean that the net salary needed per person would be much less than R30K and as such the net could be quite a bit wider and notably more salary earners would be able to co-own a property.” 

As such, the rental market remains the “go to” for many households, says Kruger.

Meanwhile, looking at BetterBond’s bond application data for August, Bradd Bendall, the national head of sales, says they see that the average purchase price of a home for buyers earning less than R15 000 a month is R1.24 million.

He says the adjustment earlier this year of the transfer duty threshold from R1.1 million to R1.21 million has had an impact on affordability and the buyers’ ability to invest in property.

“Buyers only need to pay a transfer duty of upwards of R3 300 if they buy a home of R1 210 001 or more, so it is likely that many earners between R5 000 and R10 000 a month will make the most of this threshold.” 

The bond originator says the PayInc Net Salary Index notes that most salaries paid during this year were between R5 000 and R10 000, followed by salaries of between R10 000 and R40 000.

It says that its data shows that the average purchase price of homes for buyers earning between R25 000 and R35 000 is R1.12 million, while those in the next income range-R35 000 to R55 000, are spending an average of R1.32 million on a home.

For those earning R45 000 to R55 000, the average purchase price crosses the R1.5 million threshold. 

Property buyer purchasing power

Recent data from BetterBond puts the average home purchase price nationally at just below R1.6 million, with first-time buyers spending a record-high average of R1.3 million. This suggests buyers have improved purchasing power, partly because of a real increase in average earnings, says Bendall. 

Asked how this impacted the local property market and the broader economy, BetterBond referred to the latest (September) Property Brief, noting that in real terms, after an adjustment for inflation, average monthly incomes of first-time buyers have continued rising in 2025, outpacing the consumer price index.

The company's head of sales says that with improved economic growth, hopefully having a positive impact on job creation, there should be further increases in average incomes over the next few months.

He adds that this should make housing more affordable for all buyers, particularly first-time buyers looking to enter the market. 

According to BetterBond, there are a number of ways for buyers in the lower income ranges to access the property market. It says that, as mentioned, buying below the R1.21 million transfer duty threshold saves on additional transfer duty costs. Also, it adds that buying off-plan in a new development avoids transfer duty costs. 

Bendall says working with a bond originator who can advise on what one can afford, based on their monthly income and household expenses, at no cost, is key. He says buyers in lower-income groups can afford property if they have a clear idea of how much they can afford to pay each month, taking into account all of the costs associated with buying a home.

“BetterBond offers online calculators that make it possible to work out the monthly bond repayments and how much needs to be saved if buyers would like to pay a deposit.” 

Property affordability outlook

BetterBond says going forward, average income levels of prospective homebuyers should keep pace with average home price increases to ensure access to the property market. 

Bendall says, as noted in a recent BetterBond Property Brief, between 2016 and 2020, average home prices rose at a faster rate than the average income levels of prospective homebuyers.

In 2021, he says the average house price of loans administered by BetterBond cost the equivalent of 3.2 years of income for buyers aged between 21 and 30. For buyers in their 40s, this ratio stood at 2.4 years, he says. 

“However, the recent cycle of prime lending rate cuts, as well as the shift in the deposits required to access a bond, have done well to stimulate the property market activity.

"These factors, coupled with the rising average monthly income of first-time buyers we have seen in 2025, should provide further impetus for the housing market as it means more buyers will have the financial means to invest in property,” Bendall says. 

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