SA Property Seekers

The dual effect of raising interest rates and ever increasing property prices means that South African households will now have to earn around R36 000/pm to afford an average sized house.

According to ABSA’s latest house price data an average sized home will now cost you about R920 000.
Since the implementation of the National Credit Act (NCA) banks will only grant you a home loan if your total disposable income is equal to the monthly bond repayments. That mean you’ll need about R10 793/pm as disposable income every month to qualify for a bond of R920 000 over 20years and an interest rate of 13%.

Previously, banks would consider offering bonds up to 30% of your monthly income which would mean that you’ll need a joint income of around R36 000/pm.

Absa senior economist Jacques du Toit says the latest interest rate hike will no doubt place further pressure on housing affordability, especially for first time buyers in the low and middle-income groups. Says Du Toit: “Consumers’ spending power has already been eroded by sharply higher fuel and food prices in recent months.”
Though house prices are up 15,7% in the first five months of 2007, Du Toit expects growth to slow over the next few months with average growth of around 14% forecast for 2007.