Low cost housing: The options available to South Africans

Article summary

• Housing in remote areas has become more viable thanks to the work-from-home lifestyle.
• FLISP is a government subsidy aimed at low-income home buyers. It is a massive boon for first-time buyers.
• The 100% home loan removes the need for a deposit; a major barrier to entry for first-time home buyers.

House prices have trended up over the last few years, making first-time buyers more reluctant to invest in the property market.

But buying a home is still cheaper in the long-term than renting one, and the affordable housing options demonstrated here may convince first-time buyers to take the plunge.

Low cost housing in South Africa: What you need to know

1. Where to look for affordable properties.
2. Home loan options.
3. Government subsidies: FLISP (Finance Linked Individual Subsidy Programme).

Where to look for affordable properties

By city

Port Elizabeth is the ideal city for those seeking low cost housing, with an average property price of R1 100 000 (as of 2019).

It should come as no surprise that Cape Town is the most expensive city, with an average property price of R5 755 317.

According to Lightstone data, 31.1% of the affordable market is situated in Gauteng, 13% in the Western Cape and 12% in KwaZulu-Natal.

By area

Properties in remote areas have become a viable option thanks to the work-from-home lifestyle that has took root during the pandemic.

Opportunities for affordable housing can be found in areas such as:

Johannesburg: East Rand, Randburg, Johannesburg South up to the greater Fourways region.

Durban: Amanzimtoti (south), parts of Glenwood and Morningside (central).

Cape Town: parts of Parklands (west coast), Burgundy Estate (northern suburbs).

Remote areas don’t just refer to outlying suburbs, but to small towns as well.

For example, Hermanus is seeing an influx of home buyers looking for peace and quiet. More private hospitals and schools are being established in these regions, making them even more attractive to buyers.

As for urban areas, buyers looking for affordable property will need to focus on apartments. This is fine for younger buyers who favour the lock-up-and-go lifestyle.

Home loan options

The 100% home loan is an option geared toward first-time buyers. It removes the need for a deposit, which is the main barrier to home purchase for buyers with low-incomes.

Increased competition beween banks makes them more likely to grant 100% home loans. They are especially likely to grant one if the property price is below the R1 000 000  mark.

FLISP: A government subsidy aimed at first-time home buyers

The ideal option for first-time home buyers; FLISP is a program that subsidises home purchases for low-income earners.

If your income ranges from R3 501 to R22 000 per month, you may qualify for FLISP, provided you meet the other criteria.

Criteria for FLISP:

• You must be a South African citizen with permanent residency in South Africa.
• You must not have received a government housing subsidy before.
• You must be married or cohabiting OR single with financial dependents.
• You must be over 18 years old.
• You must not have owned a fixed residential property before.

The subsidy ranges from R30 001 to R130 000, depending on your income. This subsidy can be paid into your home loan, or used as a deposit. Banks are more likely to grant home loans to buyers bolstered by FLISP.

Are you interested in applying for FLISP? Get all your questions answered, such as whether you qualify, how to apply and how FLISP can be used to acquire your first home.