While Cape Town has long been known as the most expensive city in South Africa to buy or rent a home, recent data suggests that it might not be as unaffordable as once thought, particularly for renters. Compared to average local salaries, Cape Town has become the most affordable city for those renting property in the country.
In contrast, Johannesburg has emerged as the global affordable leader for those looking to purchase larger homes. Between 2018 and 2022, Johannesburg saw a significant improvement in residents' ability to afford bigger properties. This shift was driven by a favourable comparison between the average salary and the city's cost of buying a home. As a result, Johannesburg is now regarded as one of the most affordable places in the world for purchasing a larger property.
The research, carried out by UK-based Online Mortgage Advisor, examined property trends across 219 cities globally. It analysed how much property the average worker in each city could afford to buy and how rental costs compared to salaries. The study focused on the period from 2018 to 2022, looking at how the affordability of buying and renting homes had evolved over time.
Although Cape Town's property market has a reputation for being pricey, recent findings show that renting in the city has become more affordable. According to the study, Cape Town renters are now spending 14.85% less of their salary on rent compared to five years ago. This improvement in affordability positions the city as the most accessible in South Africa for those seeking to rent.
Johannesburg also experienced a decrease in rental costs relative to average salaries, with residents now spending 6.7% less of their income on rent than they did in 2018. While this is a positive trend, it still places Johannesburg behind Cape Town regarding relative rental affordability.
In terms of buying property, Johannesburg has made significant strides. The city has seen the fastest increase in property affordability globally, with the average worker now able to afford significantly more square metres than in 2018. In 2018, the typical worker could afford just 14.6 square metres, but by 2022, this had risen to 23.2 square metres, an increase of 8.6 square metres. This impressive rise places Johannesburg at the forefront of global property markets, particularly for those looking for more space at an affordable price.
While Cape Town has also become slightly more affordable for homebuyers, the improvement has been more modest. The city ranks 16th globally in terms of affordability gains, but the size of property one can afford has not increased dramatically, highlighting that despite improvements, the high cost of property in the city still limits the growth in homeownership potential.
The study also shed light on the cities in South Africa where renters face the toughest challenges. Port Elizabeth has emerged as the worst performer in the analysis, with renters now spending 22.6% more on rent than five years ago. This sharp rise in rental costs indicates a growing affordability crisis in the city, leaving local workers increasingly priced out of the rental market.
