What sort of home can two average salaries buy in SA? It's more complicated than you think - IOL

Banks typically consider both the money borrowers have left after their expenses and a repayment-to-income ratio.

Two South Africans each earning the average salary could, on paper, afford something remarkably close to the average home being bought by first-time buyers.

But qualifying for the bond and comfortably living with it are two different things.

The average South African salary earner took home R21,642 in July, according to the PayInc Net Salary Index, which tracks the take-home pay of about 2.1 million salary earners.

Put two average earners together and R43,284 lands in their household each month.

PayInc head of stakeholder engagement Shergeran Naidoo said the average nominal net salary was 0.2% higher than in June and 2.2% above a year earlier. However, salary growth has slowed, with nominal net salaries increasing by only 1.6% during the first seven months of this year, compared with 3.7% during 2025.

"While the continued increase in nominal net salaries is encouraging, the broader picture shows that salary growth remains subdued," independent economist Elize Kruger said.

Banks typically consider both the money borrowers have left after their expenses and a repayment-to-income ratio, with monthly home-loan repayments generally capped at around 30% of gross monthly income.

That means we first need to work backwards from PayInc's R21,642 take-home salary.

Using the 2026/27 South African Revenue Service personal income tax tables and allowing for tax rebates and the employee contribution to the Unemployment Insurance Fund, an employee taking home R21,642 would need to earn roughly R25,000 a month before tax, assuming no other payroll deductions or tax credits.

Two such salaries give our hypothetical household gross earnings of roughly R50,000 a month. Applying the 30% measure means the bank could allow around R15,000 a month for a home loan repayment.

The current average deposit is 7.3% below their level two years ago.

At the current 10.5% prime lending rate and assuming a 20-year home loan at prime, that would support a bond of about R1.5 million.

That is close to what first-time buyers are actually paying. BetterBond puts the average purchase price for a first-time buyer at R1.4 million, up 19% since the third quarter of 2023.

Current Johannesburg listings at around R1.5 million show it could buy a three-bedroom apartment in Fourways, a three-bedroom townhouse in Eden Glen or a three-bedroom house in Founders View.

Move east towards Kensington and the same R1.5 million asking price buys a three-bedroom house on a 495m² property, while listings in Rosettenville include three-bedroom houses on stands of more than 500m².

In Durban, the same R1.5m stretches considerably further. Current listings include a three-bedroom, 2.5-bathroom house in Dawncliffe on a 1,866m² property and a five-bedroom house in the Bluff, while a Sea View property at the same price is marketed as a multi-cottage investment property.

In Cape Town, R1.5m buys considerably less space. Current listings at that price include a 70m² two-bedroom apartment in Lansdowne, a 56m² two-bedroom apartment in Costa da Gama, and a 65m² two-bedroom apartment in Marina da Gama. A two-bedroom apartment in Zonnebloem is also advertised at R1.5 million.

Home-loan applications are also 11.3% higher than in the fourth quarter of 2023, although BetterBond notes that several factors have slowed homebuying activity this year, including the increase in the prime lending rate from 10.25% to 10.5% in May.

Banks are saying yes more frequently, too. BetterBond's home-loan approval ratio reached 64.5% at the end of August.

The calculation looks rather different once the bond comes out of the money actually reaching our couple's bank account. A roughly R15,000 repayment would swallow about 35% of their combined R43,284 take-home pay, leaving them with around R28,000 a month.

That still has to cover rates and taxes, electricity and water, groceries, transport, insurance, medical expenses, children, existing debt and every other household expense.

There may also be a deposit to find. BetterBond says banks increased deposit requirements during the first two months of the third quarter, although average deposits remain 7.3% below their level two years ago.

Affordability has nonetheless improved for many South Africans. "Except for homebuyers aged 21 to 30 years, these ratios are lower than a decade ago, signalling an improvement in the affordability of homebuying for most age groups," BetterBond said.

For buyers aged 41 to 50, the average house-price-to-income ratio has fallen 27% since 2021 to 1.76, meaning the average property costs about 1.76 times their annual income.

The average price of a home has been steadily increasing.

But improving housing affordability is colliding with weaker purchasing power. PayInc's real net salary index recorded its first monthly increase in nine months in July as inflation eased, but real take-home salaries remained 2.2% below their level a year earlier.

"Purchasing power remains weaker than a year ago, and this continued erosion has implications for household spending and consumer confidence," Kruger said.

House prices, meanwhile, continue to climb. Statistics South Africa recorded annual residential property price inflation of 7.9% in April, including an 11.2% increase in the Western Cape and 4.8% in Gauteng.

"There are some encouraging signals in the market, from improving home loan approval rates to stronger employment and continued growth in house prices. While buyers remain sensitive to interest rates and deposit requirements, affordability has improved for many South Africans,” said Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond.

Potgieter added that these trends point to a market where opportunities remain for those ready to take their next step towards homeownership.