The cost of living in South Africa is not as cheap as it once was. Increasing food costs, frequent electricity hikes and high fuel prices are all contributory factors. And, although salaries negotiated in the South African currency may make for a fairly comfortable lifestyle, they may not go as far outside local borders.
Nonetheless, for the many expats who end up living in one of the big cities, everyday costs will be far cheaper than in New York City, London, Hong Kong or any of the other western or Asian superpowers.
Income tax rates in South Africa range from 18% to 40% and, thanks to the introduction of capital gains tax in 2001, any capital assets can be taxed as long as an expat is regarded as a resident; even if the assets are situated overseas and remain unsold.
Expats that are recognised as residents are also taxed on their worldwide income, whereas non-residents are only taxed on their South African-based income. This includes taxation on rent from property assets in South Africa, interest from loans used or applied for in South Africa, and salaries.Some countries – such as the UK - have a double taxation agreement with South Africa. For instance, if you pay tax on a rental property in London you won't pay tax on it a second time in South AfricaIt pays to get help from an accountant - both in your home country and in South Africa - before you arrive.
Whether you're relocating to Johannesburg, Cape Town, or anywhere else in South Africa, the range, quality and affordability of accommodation will probably make adjusting to life on the African continent a little easier. On the whole, houses are larger than in most European countries, and even a relatively inexpensive property often has a garden and a swimming pool.
Renting is, thankfully, a straightforward process. To secure a deal, you just have to show that your monthly income is at least three times the rental-value of the property and then pay a deposit of one or two month's rent. Leases are typically signed on a one or two-year basis, although shorter periods are possible.
Generally, the further away from the city you plan to live, the less expensive the rent will be. Equally, expats will get more for their money in Johannesburg than in Cape Town.
Renting one room in a larger house that’s shared by other people (house sharing) is also very popular in South Africa, and is a great way for newcomers to make friends.
Average monthly rental prices in good areas:
(1 South African rand = 0.12 US dollars, 0.07 British pounds and 0.09 Euros)
A two-bedroom luxury apartment in Cape Town city centre - 15,000 ZAR
A two-bedroom apartment in Johannesburg city centre - 6,000 ZAR
A three-bedroom house in an upmarket Johannesburg suburb - 13,000 ZAR
A three-bedroom luxury house in an upmarket Cape Town suburb - 25,000 ZAR
Average monthly utility costs:
Electricity for a 2-3 bedroom house - 1,200 ZAR
Water for a 2-3 bedroom house - 600 ZAR
There’s been an increase of roughly 8% to 10% in the price of food in South Africa in the last two years and prices continue to escalate. Expats who like to eat out at restaurants will soon find that this has become an expensive luxury that can cost as much as four times more than eating at home.
To give a rough idea of what out-goings you can expect, a family of two adults and two children would have an average monthly food bill of about 5,000 ZAR a month. That’s roughly equivalent to 461 EUR, 396 GBP and 633 USD.
It almost goes without saying that local produce and South African brands are substantially cheaper than imported goods and shopping with this in mind will help to keep costs down.
2 litres of milk - 18 ZAR
Loaf of bread - 9 ZAR
1litre mineral water -20 ZAR
Bottle of wine - 30 ZAR
Toothpaste - 12 ZAR
Paying a monthly fee for private security is an expense that many expats won’t have factored into their budgets. Although most expats invest in some form of security protection, expats that end up living in Johannesburg will discover a particular obsession with home security, electrified fences and a hatred for walking alone at night.
For ultimate peace of mind, it’s prudent to hire a private security firm that will install an alarm system in your home; some will even provide a night patrol and an armed response service. Most firms charge a monthly fee that is very reasonable.
South Africa lags behind the US and Europe in terms of fast, affordable internet access. Broadband is still a fairly new thing and is comparatively expensive. You can expect to pay around 500 ZAR a month for 1 Gig of data at 512 mbps; although this usually includes a phone line.
Be wary of signing an extended contract as there may be penalty fees if you have to terminate it early.
When it comes to education, there are plenty of schools to choose from. However, there’s a vast difference in fees for the much-praised private schools and much-maligned government-run facilities.
A top private school will charge from 30,000 ZAR to around 100,000 ZAR, depending on what school year the child is in.
Model C school fees vary from 20,000 ZAR to 40,000 ZAR, again depending on the school year. (Model C are government schools that are administered and funded by the parents. They can offer exceptional facilities and a very high standard of tuition.)
Government-funded schools charge on a sliding scale according to parental income. Fees can be anything from 500 ZAR to 15,000 ZAR.