PROPERTY NEWS - For many, buying a home is still a major life milestone but affordability varies widely across the globe. Property prices, mortgage rates, and, most importantly, household income all play a role in determining whether homeownership is within reach. 

In this regard, South Africa has emerged as the most affordable country to purchase property, according to a recent global study.

An analysis by international real estate brokers Best Brokers ranked South Africa as the top country for housing affordability. Here, property prices exceed average real wages by only 6.22%, making it the most favourable market worldwide when it comes to cost-to-income ratio. 

This stands in sharp contrast to countries like Turkey, where property prices account for 81.45% of wages, ranking it the least affordable globally.

The report compared house prices across more than 60 countries, adjusting data for inflation to reflect real economic conditions. In many emerging or smaller economies, the gap between earnings and housing prices was significant. 

Turkey, for instance, faces an inflation rate of 61.78%, greatly diminishing its citizens’ purchasing power with an average annual income of just $2,965.

South Africa, in contrast, maintains a more balanced relationship between income and property prices. 

Other high-ranking countries with strong economies and high per capita income include the United States (6.50%), Bahrain (8.34%), and Denmark (9.91%). 

In the US, high real wages ($49,525) help offset elevated property prices per square metre, illustrating how higher incomes can support wider homeownership, despite high absolute costs.

However, South Africa’s top affordability ranking doesn’t mean all residents can easily access homeownership. According to the 2024 TPN Tenant Survey Report, 58% of South Africans said financial barriers were preventing them from buying a home, while 48.1% stated they simply could not afford to.

Around 10% also cited poor credit history as a major obstacle. While property prices may be low in relative terms, limited access to credit remains a key barrier to homeownership.

Meanwhile, the rental market has recorded a notable surge in prices, as highlighted in the latest PayProp Rental Index for Q4 2024. 

This increase has been driven by a range of economic factors including high interest rates and inflation placing pressure on both tenants and landlords. As a result, rising rent prices are forcing many would-be buyers to continue renting instead.

The average rent hit a record high of R9,051 a 5.2% year-on-year increase, with a R453 rise compared to the previous year and R195 higher than the previous quarter. This trend has pushed many tenants into higher rental brackets, increasing the financial strain. 

While the majority of tenants still pay between R5,000 and R7,500 per month, this group has shrunk from 31.2% in Q4 2023 to 28.9% a year later.

In this context, more than half of tenants now pay R7,500 or more in monthly rent. This shift is being felt financially, with rent now accounting for 28.7% of household income in South Africa up from 28.3% in Q3 2023. 

The growing share of income spent on rent, combined with rising debt repayment burdens (which increased from 43.6% to 44.1% of income), is putting added pressure on households.

Additionally, 17% of tenants remain in arrears on their payments, prompting landlords to raise deposit requirements. In Q4 2024, the average deposit stood at 1.31 times the monthly rent slightly up from 1.29 in the same period in 2023. 

This measure reflects landlords’ attempts to hedge against inflation and rising rental prices, though it places further strain on renters already struggling to meet financial obligations.

A key insight from the report is the variation in rental prices across provinces. 

As expected, the Western Cape remains the most expensive region to rent, with an average rental price of R11,141 in Q4 2024. In contrast, the North West recorded the lowest average rent at R6,798.

The Free State and Eastern Cape also saw rental increases, with the Free State posting an 8.8% increase in Q4 2023 and 9.1% in Q1 2024. Gauteng, one of the priciest areas overall, experienced a more modest 3.4% uptick.

According to the PayProp Rental Index, South Africa’s national vacancy rate also declined from 6.72% in 2024 to 5.07% in 2025.

This drop has worked in landlords’ favour, as limited rental stock has enabled further price hikes. 

Particularly, the Western Cape had the lowest vacancy rate at 1.07% in Q3 2024, showing strong demand in the province. If supply fails to keep pace with this demand, prices are likely to rise further.

Looking ahead to 2025, real estate investment in South Africa continues to show promise. Despite a forecasted uptick in vacancies within the luxury property segment, rental demand remains strong. 

With careful planning and strategic management, landlords can adapt to evolving market trends and tenant preferences ensuring sustainable returns throughout the year.

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