Only 15.8% of South Africans earn enough take-home pay to afford a home valued at R1.3 million, according to independent economist Elize Kruger. This analysis follows the latest findings from the BankservAfrica Take-Home Pay Index (BTPI).
Kruger explained that, based on an estate agent’s calculations, purchasing a R1.3 million property with a monthly repayment of R13,480 over 20 years—at the prime lending rate of 11%—would require a gross monthly salary of R40,000. Given an effective tax rate of 23.1% for an annual income of R480,000, this translates to a net salary of approximately R30,000 per month.
Responding to an inquiry from Independent Media Property, Kruger noted that these calculations are based on a single income per household. If two incomes were combined to finance a home, a larger percentage of salary earners would be able to afford property ownership.
Housing Challenges in South Africa
The Department of Human Settlements recently acknowledged ongoing difficulties in housing accessibility, particularly for middle-income earners who fall into the “gap market.” This issue is more pronounced in metropolitan areas, intermediate cities, and smaller towns. The department urged all stakeholders to collaborate on long-term solutions, as affordability constraints contribute to the rise of informal settlements.
According to the Centre for Affordable Housing Finance in Africa, in 2023, South Africa had 6.91 million residential properties. Of these, 76% were valued at under R1.2 million, with two-thirds priced at R900,000 or less.
Understanding the BTPI
The BTPI measures salary payments processed through the National Payment System (NPS), excluding high-income earners earning over R100,000 per month. It tracks trends in approximately 4 million salary payments, representing 37% of the formal workforce and 25% of the broader labor market, including informal and agricultural workers.
This index reflects net salaries after deductions such as income tax, UIF contributions, pension payments, and certain medical insurance and debt repayments.
Improved Salary Growth in 2024
After three years of struggling with inflation outpacing wage increases, 2024 has shown positive signs for salary earners. Kruger reported that nominal take-home pay rose by 7.9%—the highest increase in years. However, she noted that this improvement was partly due to a low base effect, as 2022 and 2023 were particularly difficult years for income growth.
In real terms, December 2024 saw average take-home pay reach R14,887, an 8.7% increase from the previous year. Lower inflation, which averaged 4.4% in 2024—the lowest since 2020—helped boost purchasing power.
Outlook for 2025
Looking ahead, Kruger suggested that salary growth could continue in 2025. Economic forecasts predict real GDP growth of 1.7%, slightly higher than in 2024.
She attributed this potential improvement to factors such as increased household spending, higher fixed investment, and ongoing structural reforms. Efforts to enhance power generation, resolve freight and port bottlenecks, and upgrade water infrastructure are expected to contribute to economic stability. These improvements could create a more favorable environment for businesses to offer more competitive salary increases in 2025.
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