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Which Province Is The Most Affordable To Live In?

Compare Guru
2017-01-02
In terms of household income and the price of property in the various provinces – where in South Africa is the most affordable place to live?
The price of houses in all five of SA's major regions have shown a slowing year-on-year growth in the 3rd quarter of 2016.
While the Western Cape is still king of property, in terms of growth, John Loos, the Household and Property Sector Strategist at FNB, states that it “past its best” in the third quarter of 2016. Although Gauteng is the largest region in South Africa, Loos believes it has been leading the way to a slower average house price growth for a few years now. In the last quarter of 2012, Gauteng enjoyed a stunning 9.3% annual growth in its average property prices. In the second quarter of 2016, the province was at a low 2.7% growth rate. By the end of the third quarter, growth had slowed to a mere 2.1%. Loos says if one looks at house price growth in some of the smaller provinces, the market could possibly have been affected by certain climate factors, such as the drought. Markets in smaller regions, where there is a big holiday component, could have also been affected by current economic conditions.
"In a weaker economy, the demand is mainly about primary housing. On the one hand, you might see some relief from the impact of the drought. But, holiday towns and smaller regions might take more strain. In the minor provinces, the other negative impact on house prices has been the mining sector that has not done so well in last few years."
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Provinces According To House Price Growth

Gauteng does not have the weakest house price growth. In terms of house price growth, Mpumalanga, Free State, Northern Cape, North West, and Limpopo Provinces have risen by a mere 0.8% year-on-year in the 3rd quarter. While the Eastern Cape Province has a growth rate of just 0.1%. Slightly stronger than Gauteng was KZN, with a house price growth rate of 4.2% year-on-year, albeit also on a slowing trend, FNB said. The Western Cape enjoys a stronger-than-most property price inflation rate (10.5%), which, when considering the lifestyle and economic opportunities, is believable. 

Average House Prices In All Major Provinces

  1. Western Cape – R1 256 372
  2. Gauteng – R1 016 804
  3. KwaZulu-Natal – R988 142
  4. Eastern Cape – R815 914
  5. Other five provinces – R803 692
FNB pointed out that, despite the fact that the Western Cape and Gauteng have, by some margin, the highest per capita and per household incomes.

Average Salary Per Annum/ Province

All estimations of salary were provided by IHS Global Insight South Africa, a data and business insight company.
  1. Western Cape  - R245 788 p.a.
  2. Gauteng - R229 192 p.a.
  3. Kwazulu-Natal - R173 103 p.a.
On a Per Capita Income basis, Gauteng had the highest, estimated at R72 951 in 2015. Followed closely by Western Cape with R70 628 and then KZN.

Major Four Provinces’ Income Comparison

Province Per household income Per capita income
Gauteng R229 192 R72 951
Western Cape R245 788 R70 628
KZN R173 103 R42 702
Eastern Cape R133 139 R33 791
Northern Cape, Mpumalanga, Limpopo, The Free State, North-West R142 848 R39 793

The Results

Gauteng is the most affordable of all major regions. With an estimated average house price/per household income ratio of 4.44, Loos noted that Gauteng is the most affordable of the major regions in 2015. The Western Cape is the second least affordable with a ratio of 5.11. The Eastern Cape is thought to be the least affordable with an average house price/ per household income ratio of 6.13 in 2015. The Western Cape's affordability ratio has increased from 4.37 in 2011 to 5.11 in 2015, this despite a high household income. Tshwane property prices are, however, healthy. According to Loos, the FNB Estate Agents Survey indicated that Tshwane is the stronger in terms of house price growth.
"None of the areas in Gauteng have been wonderful in house price growth. But, the eastern suburbs of Tshwane seem to have become a popular area for commuters who work in Johannesburg. The Gautrain might have helped this tendency too, but one can't say for certain." 
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