South Africa has a cheap housing problem

South Africa is facing a severe shortage of affordable formal housing, with nearly five times more low-income households than affordable properties available.

Recent Lightstone data showed that one property was available for 4.8 households earning under R13,000 a month. In other words, nearly five households exist for every property that fits their affordability criteria.

This ratio improves to 3.3 households for every one formal property if the salary threshold is raised to R26,000 a month. For higher income groups, it is closer to 1.2 to 1.

“But either way, more than 80% of South Africa’s households earned under R26,000 per month, which meant affordability remained a major obstacle to most households having a property to call their own”, Lightstone Property managing executive Hayley Ivins-Downes said.

This pushed many into backyard rentals, informal structures, or traditional dwellings that were not formally registered.

Often, these options were further away from work than is ideal. “In many towns, lower-income working people struggled most to find accommodation while property values rose for the more affluent,” she said.

Nearly 12 million households in South Africa earn less than R13,000 a month. If households stick to the guideline that they spend no more than a third of their income on housing, there are fewer than 2.5 million properties.

Ivins-Downes explained that this was the most significant gap between households and property available by some distance.

For example, 2.5 million households earned between R13,000 and R26,000 per month, and 1.8 million properties were available for this income group.

This translates to 1.3 households for every property available. Interestingly, more properties were available for this income group than for households in the R26,000 to R40,000 salary range.

Only 1% of homes valued under R300,000 – 80% of which were subsidised – had been bought or sold in the last five years.

This is notably lower than the R300,000 to R500,000 price band, which sold 4%, and the R500,000 to R750,000 price band, which sold 6%. The R750,000 to R2 million price band sold 13% during the period.

Education makes a difference

“The data told us that not only was there a significant shortage of affordable housing, but there were proportionately fewer transactions among lower-income earners, limiting mobility, equity growth, and broader economic participation”, Ivins-Downes said.

The trend continues when looking at rental properties. Using the 30% rule, households earning less than R13,000 monthly would have to spend under R3,900 on rent.

However, according to Payprop’s Q1 2025 Rental Index, the average rent in South Africa is more than double this, at R9,132.

The cheapest province to rent in South Africa, the North West, has an average monthly rental fee of R7,153. The most expensive province, the Western Cape, comes in at R11,285 – more than many people’s entire salary.

Data also revealed that the more education households have, the more likely they are to be able to buy houses in higher price bands.

For example, a household with two working people who did not matriculate would likely be able to afford a house valued at R250,000.

However, if the two people had matriculated, this figure jumped to R380,000. For two people with degrees, the threshold rose to R1.8 million.

Mapping these affordability scenarios to suburbs showed how the difference in education and earning potential affected housing choice.

In Johannesburg, couples without a matric found affordable stock in areas such as Hillbrow, Johannesburg Central, and Orange Farm. In contrast, couples with degrees would buy in suburbs such as Morningside, North Riding, and Weltevreden Park.