South Africans need more than a salary increase to give them confidence to buy a home.
Image: Tom Rumble/UnSplash
Improved salaries (both nominal and real) should spell good news. But, for embattled South Africans too many factors hamper their ability to afford to buy a property or to rent one, says Elize Kruger, an independent economist.
She said there are many headwinds that could hamper the positive prospects of a salary increase, particularly the elevated cost of living, still high interest rates and additional taxes (higher VAT rate and no adjustment to tax brackets), as recently announced in the 2025 National Budget.
Kruger says these headwinds of high interest rates, high cost of living and additional taxes have knocked consumer confidence abruptly in the (first quarter of this year) Q1, which could dampen salary earners’ willingness to spend, despite having more purchasing power.
"In an uncertain environment, with multiple headwinds, salary earners might opt to be conservative and keep on renting as opposed to buying a property, until there is more clarity on how the scenario unfolds,” Kruger said.
Not helping the matter is escalating property prices in some regions, such as the Western Cape. Meanwhile Johannesburg and KZN, both with ailing infrastructures, do offer more affordable property - however returns are at present not great.
The real take-home pay, measured in the BankservAfrica’s Take-home Pay Index (BTPI), saw an encouraging rise in February as the sharp slowdown in inflation through 2024 continued to have a positive effect on salary earners’ purchasing power.
Shergeran Naidoo, BankservAfrica’s head of Stakeholder Engagements said last week the real take-home pay, adjusted for inflation, increased by 0.9% on a monthly basis to reach R15 799 in February. “This also represented a notable improvement of 10.7% on year-ago levels and the highest in three years.”
The payments clearing house said last year, real take-home pay averaged at R14 292, up by 3.1% in 2024, representing the first increase since 2020. Should inflation remain well-contained, 2025 will likely be the second consecutive year of positive real take-home pay growth.
Meanwhile, the nominal average take-home pay rose marginally to R18 241 in February 2025, compared to R18 141 in January, but still above the level of R15 983 a year earlier, continuing the upward trend in take-home pay over the past eight months. According to publicly available data sources, the nominal salary increases for 2025 are forecast to range between 4.1% - 6.5%.
Kruger said potential homeowners and current homeowners should use additional purchasing power, as reflected in the increase in real BTPI to pay off debt or to save up if they are able to.
The recent increase in the transfer duty threshold from R1.1 million to R1.21 million is said to benefit first-time buyers, particularly young professionals and single women.