News - Average house to top R800k

Absa's latest house price index put average house prices at R765 400 in March this year. This illustrates just how much less affordable houses have become since 2002 - despite interest rates dropping by four percentage points over the same period.

South African families must now earn R25 500 a month to be able to afford the average priced, middle-sized house - R11 000, or 75% a month, more than they needed to buy the average priced home four years ago. This according to Joan Muller from Finweek.

The Absa affordability calculation assumes that the house is financed with a 100% mortgage over 20 years at the current prime interest rate of 10.5%, which translates into a repayment of R7 642 a month.

That's almost double the mortgage repayment on the "average" priced house of four years ago - R4 328 a month for the average house that cost R339 110 in March 2002 at the then prime rate of 14.5%.

A family would have had to earn a gross household income of close to R14 500 a month to be able to buy the average priced house with a 100% mortgage.

 

Article by Fin24