Mmesi, Lesotla2024-10-032024-10-032021Mmesi, Lesotla. (2024). A comparative study of housing affordability in South Africa using the adjusted Debt-Service Ratio and Price-Income Approach [Master’s dissertation PhD thesis, University of the Witwatersrand, Johannesburg]. WireDSpace.https://hdl.handle.net/10539/41344https://hdl.handle.net/10539/41344A research report submitted in partial fulfillment of the requirements for the degree of Master of Business Administration to the Faculty of Commerce, Law and Management, Wits Business School, University of the Witwatersrand, Johannesburg, 2021This study compares the adjusted Debt-Service Ratio (DSR) model and the widely used Price-Income Ratio (PIR) in the South African context to establish which of the measuring approaches give better and reliable results over time. In South Africa, housing unaffordability remains a challenge and accurately quantifying the extent of the problem is of key importance. The adjusted DSR model was seen as an appealing housing affordability measure to be explored as it corrects for household income changes and net financing cost of the mortgage loan thereof giving a refined calculation for housing affordability. The research also explores the relationship of both the adjusted DSR and PIR to key macroeconomic variables, that is, economic growth (EG), mortgage rate (MR), unemployment rate (MR) and house price (HPI). The findings show that the PIR is the better measure of housing affordability than the adjusted DSR. The PIR accurately parallels other banking sector data regarding housing affordability, whereas the adjusted DSR tends to underestimate housing affordability in the South Africa context. Another key finding is that, on average, the housing prices are too high for an economy like South Africa, which is still battling with, low GDP growth rate, high unemployment rate, inequality and povertyen© 2021 University of the Witwatersrand, Johannesburg. All rights reserved. The copyright in this work vests in the University of the Witwatersrand, Johannesburg. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of University of the Witwatersrand, Johannesburg.Debt-Service Ratio (DSR)Price-Income Ratio (PIRSouth AfricaUCTDSDG-8: Decent work and economic growthDissertationUniversity of the Witwatersrand, Johannesburg