South Africa has the most affordable capital city in the world, according to a study by Netcredit – an American online lender.
Property analytics group Lightstone said that South Africa’s property market would likely face a challenging 2023, with low expectations for growth.
According to Lightstone, South Africa’s 2023 residential property market will be shaped by challenges locally and globally. Property owners will likely feel the pain of the stagnating economy, with prices growing at a rate lower than inflation.
Despite the challenging local property market, Pretoria is the most affordable capital city when comparing property price to income, according to Netcredit.
Netcredit’s study looked at over 800,000 properties in 73 different capitals and calculated the median house price for each city per square meter (sqm) and in total.
The group then calculated the average net salary for each capital and used that figure to calculate affordability and the number of years an average earner would need to buy a median-value home.
Pretoria has the best affordability, with the average home costing just seven times the average salary.
It would thus take only 4.7 yearly salaries to afford the median house price in Pretoria – the same applies to Muscat, Oman.
On the other edge of the scale, it would take 158.4 yearly salaries to afford the median house price in Tehran, Iran.
On a global scale, the property market is facing a difficult time. During the pandemic, prices rose quickly as people radically altered their idea of where and how they wanted to live.
However, with the fallout of the pandemic and the war in Ukraine, global house prices are declining again.
Higher interest rates and the cost of living have reduced demand for houses, but a general shortage of properties on the market has prevented prices from bombing.
Oxford Economics said that most OECD nations would likely see a slowdown in house price growth, with house prices expected to fall in over half of them – marking the widest deceleration in property price growth in over 22 years.
Real house prices could decrease by 25% in emerging markets in the next three years, according to the IMF.
Pretoria may be the most affordable city, but it only has the 6th lowest median house price ($69,965).
Pretoria trails Havana, Cuba ($40,569), Ulaanbaatar, Mongolia ($51,514), Ankara, Tureky ($63,713), Windhoek, Namibia ($67,200) and Minsk, Belarus ($68,970).
In terms of square meterage, Pretoria ranks fifth cheapest ($568m²) – behind Havana, Cuba ($234m²), Ankara, Turkey ($432m²) and Tripoli, Libya ($500m²).
Despite Havana, Cuba having the lowest average house price, it would still take 91.4 yearly salaries to afford the median house price.
The most expensive Capital city is the city-state of Monaco, with a median house price of $4,475,000 and $52,000 per m2.
In terms of median house price, Luxembourg ($1,416,610), Singapore, ($1,342,848), Seoul, South Korea ($921,600) and Bern, Switzerland ($773,896) make up the rest of the top five.
In addition, Monaco is followed by Singapore, ($15,009m²), Seoul, South Korea ($11,244m²), Luxembourg ($10,897m²), and Paris ($10,880m²) in the top five for per m2.
A third of Monaco’s population are millionaires, and property is so expensive that only 25% of the country’s private sector employees live within the country’s borders.