The Illusion of Affordability: Why Most South Africans Can’t Truly Afford Their Homes

Africa (Commonwealth Union) _ A recent independent study has cast a spotlight on South Africa’s deepening housing affordability crisis, revealing that fewer than 16% of citizens can genuinely afford homes priced above R1.3 million. Despite an increase in loan approvals, experts warn that many buyers are entering homeownership without a full grasp of the financial responsibility involved.

Henri Le Grange, Certified Financial Planner® at Old Mutual Personal Finance, warns that qualifying for a home loan is not the same as affording the true cost of ownership. “Banks often approve loans based on income and historical expenses,” he explains. “But they rarely consider future costs like maintenance, insurance, rate hikes, and inflation—leaving buyers financially exposed.”

Indeed, many new homeowners face financial strain soon after moving in, realizing that the monthly repayment is only part of the equation. Buyers often find themselves unprepared for expenses such as utilities, property taxes, transfer duties, and upkeep. “I’ve seen people approved for loans they couldn’t sustain, and the emotional toll can be significant,” Le Grange adds.

Izak Odendaal, Investment Strategist at Old Mutual Wealth, attributes the affordability gap to rising interest rates, stagnant incomes, and inflated property prices. “The dream of owning a home is slipping away for many South Africans,” he says, citing historically low affordability levels.

Le Grange suggests adopting a proactive and informed approach to prevent financial traps. “Buying a home should be part of a broader financial plan. It’s not just about getting approved it’s about ensuring long-term stability,” he stresses.

He offers five key steps to assess true affordability:

1. Budget for the long haul – Don’t overlook hidden costs like repairs, legal fees, and higher utility bills.
2. Simulate loan repayments – Save the equivalent of your expected bond payment each month before committing.
3. Factor in interest rate changes – Understand how future hikes could impact your budget.
4. Choose a suitable loan term – Balance monthly affordability with long-term interest costs.
5. Consult a financial adviser – Tailor a financial plan that aligns with your life goals and mitigates risks.

“In today’s volatile economy, resilience is key,” Le Grange concludes. “A financial adviser can guide you in making decisions that serve both your present and your future.”