Whether you are renting or paying a bond, the financial expense of having a space to call home is a crucial one for most South Africans.
READ: Can you afford to buy a home? | Rising interest rates and the average salary in SA right now
Homeownership affordability remains a crucial factor for those looking to enter the property market. Industry data shows rental growth in South Africa has been slow following two very challenging years of Covid restrictions, high vacancies and economic woes made worse by a high unemployment rate.
A historically low interest rate has also buffered the residential property market as homeownership for those not experiencing a financial crunch did become more viable. However, the Reserve Bank's two consecutive hikes in a row is a sign of things to come for the remainder of 2022.
Click here to check your bond affordability or apply for bond pre-approval here.
That being said, a new study reveals South Africa has some of the most competitive rental vs mortgage prices in the world. The research by Compare The Market analysed average house and rent prices around the world to reveal which countries have the smallest (& largest) margins between rent and house prices.
South Africa tops the list with a margin of 0.8%, compared to Norway ranked 10th with a 14.6% difference in the cost of owning property versus renting it.
|
Rank |
Country |
Average rent (three bedrooms) |
Estimated monthly mortgage payment |
Difference between house prices and rent |
|
1 |
South Africa |
$865 (about R13 009.60 at R15.04/$) |
$872 (about R13 114.88 at R15.04/$) |
0.8% |
|
2 |
South Korea |
$1,176 |
$1,259 |
7.1% |
|
3 |
Estonia |
$747 |
$816 |
9.2% |
|
4 |
Israel |
$1,485 |
$1,641 |
10.5% |
|
5 |
Japan |
$1,382 |
$1,534 |
11.0% |
|
6 |
Lithuania |
$692 |
$775 |
12.1% |
|
7 |
Belgium |
$1,224 |
$1,384 |
13.1% |
|
8 |
Switzerland |
$2,599 |
$2,961 |
13.9% |
|
9 |
Poland |
$951 |
$1,089 |
14.5% |
|
10 |
Norway |
$1,708 |
$1,958 |
14.6% |
READ: Young professionals are snapping up top-end rental property in Joburg
TPN Market Strength Index shows that demand for rental property in the third quarter of 2021 remained weak.
Low demand is perhaps not surprising considering that the hard lockdown in the second quarter of 2020 wiped out 14% of all jobs. Even after some subsequent initial job recovery, the unemployment situation remains concerning at 34.4%, meaning 1.4 million pre-pandemic jobs have been lost.
According to the index, demand for rental property in the third quarter of 2021 is only slightly higher than average at 56. Rental property supply, however, remains at pre-pandemic highs with a rating of 67. Weak tenant demand coupled with supply highs translates into a Market Strength Index of 44 which, in short, translates to an over-supplied residential rental market," says Michelle Dickens, Chief Executive Officer of TPN Credit Bureau.
READ: SA's high unemployment rate hits rental market
"Residential rental prices appear to have also reached the bottom of negative escalation and are slowly starting to rise into positive territory at 0.4% in the third quarter." she says.
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