The question of what constitutes 'affordable' housing is complex in South Africa, as the definition can depend on household income, monthly payments, or the property price itself. Each approach presents a different picture of who actually benefits from 'affordable housing' services.
One common method is defining affordability based on household income. A universal benchmark suggests that household housing expenses (whether rent or mortgage repayment) should not exceed 30% of gross monthly income. However, a problem arises: an affluent household spending 30% of its income on a R50,000 monthly mortgage technically meets this rule, but no one would call a R6 million home affordable.
Therefore, affordable housing policy must consider both the 30% income rule and a set income ceiling. In South Africa, the Financial Sector Conduct Authority (FSCA) sets the upper income threshold for affordable housing at R34,400 in gross household income per month. Applying the 30% rule means a household earning R34,400 can spend up to R10,320 per month on housing.
But what does R34,400 actually buy?
Calculating a mortgage at an interest rate of 11.5% (Prime + 1%), a loan term of 20 years, and a loan-to-value ratio of 100%, a household paying R10,320 per month could secure a loan of approximately R968,000. According to the FSCA definition, this falls within the affordable housing market. Nevertheless, another frequently used definition yields a completely different result. The Centre for Affordable Housing in Africa (CAHA) historically defined affordable housing by price as homes costing less than R600,000.
There is already a significant gap between these definitions of 'affordable.' The issue becomes even clearer when comparing these thresholds to what South African households actually earn. A Stats SA income and expenditure survey for 2023 shows the average household income at approximately R17,030 per month. Applying the same 30% benchmark results in an affordable housing payment of only R5,109 per month. With the same mortgage assumptions, such a household could afford a home worth about R479,000, which is less than half the value of the property linked to the FSCA income threshold of R34,400.
Even the average figure of R17,030 should be viewed cautiously. In a country with extreme income inequality like South Africa, averages can be misleading because high-income households inflate the average, distorting the perception of what a typical household earns.
The Median Tells a Different Story
The South African Income Expenditure Survey (IES) for 2023 reports a median monthly household income of R7,981. Applying the same 30% principle, this household could afford about R2,394 per month for rent or mortgage repayment. With the same mortgage assumptions, the theoretical purchasing power would be R225,000.
This clearly does not reflect the realistic picture of the entire housing market. Many households earning below the median require state-subsidized housing, not private affordable housing. However, this comparison reveals an uncomfortable reality: R34,400 is the affordable housing threshold that exceeds the capacity of the typical South African household.
Yet, there is a fair counterargument. The IES includes all households, including those with no income. If the question of affordability focuses specifically on households participating in the formal housing market, worker wages may provide a more relevant comparison. Quarterly Labour Force Survey data from Stats SA shows the average gross monthly wage in the formal non-agricultural sector at approximately R29,997 in 2026. This amount is much closer to the FSCA threshold of R34,400, although the QES reports averages, not medians.
Can 1,000 'affordable' homes change the demographic makeup of Granger Bay? Atlantic Coast, City Bowl, and V&A Waterfront are among the most sought-after and expensive housing markets in Cape Town, where high demand and limited land have pushed housing out of reach for ordinary households. On the Atlantic Coast, the median sale price reached approximately R8.35 million in the first half of 2026. Rental prices are equally prohibitive: single apartments rent for approximately R18,000–R25,000 per month on the Atlantic Coast.
Against this backdrop, 1,000 homes for households earning up to R34,000 per month cannot simply be ignored just because R34,000 itself is exclusionary by national standards. In Granger Bay, the key question is not whether R34,000 represents an affordable income for South Africa as a whole. The question is whether these 1,000 homes can significantly expand access to one of Cape Town's most exclusive areas.
A thousand affordable homes will not solve Cape Town's housing crisis nor make Granger Bay accessible to most households. But in a market where homes cost millions, creating affordable housing is a significant start. While R34,000 may not be the most inclusive definition of affordability, the 1,000 households that would otherwise be excluded from Granger Bay will gain access to a part of Cape Town that has long been inaccessible to them. The real test is whether these homes can translate affordability into meaningful spatial inclusion.