Would you be richer if you lived in Joburg?

It’s an endless topic of conversation for South Africans – the Johannesburg/Cape Town debacle. Many claim that living in Johannesburg is a sure way to get richer, while living in Cape Town is the best way to improve your tan. But is there any truth in these claims? Moneybags investigates.

The salary disparity

In our research we found that most industries offer higher salary packages in Johannesburg. Viv Gordon, owner of the recruitment agency Viv Gordon Placements, informed us that Johannesburg salary packages are between 15 – 25% higher than Cape Town salaries within the advertising, marketing and public relations fields.

“The disparity in salaries varies from company to company,” says Gordon, “We find that the large corporate companies in Cape Town offer comparable remuneration packages to those in JHB. The disparity tends to be more visible in the medium sized companies.”

Andre Rabeman of Bizcommunity agrees that Johannesburg’s average salaries in the IT sector are generally 10 to 15% more than in Cape Town. Megan Randell of Executives Online states that salaries in Johannesburg in the financial sector are higher, too. “In some cases, you see a difference of up to 20%,” she says.

However, there are plenty of young entrepreneurs making a dent in the Western Cape.  Areas such as health and wellness, property, tourism and adventure sports are responsible for the growth of some successful SME’s. With a bit of savvy entrepreneurship in a niche market, it may be possible to create the type of wealth you could earn in the City of Gold.

Property rentals and purchase

According to Herschel Jawitz, CEO of Jawitz Properties, Johannesburg, being the commercial and financial hub of South Africa, has a greater demand for property rentals based on the number of people who live and work there. “Clearly this differs from area to area,” says Jawitz, “For example, the Cape Town CBD may dictate higher rentals because it provides a combination of work, play and life – the three elements for which people will pay a premium. The Johannesburg CBD does not yet have this preferred combination.  However, the Sandton CBD is able to offer this combination and can therefore dictate higher rentals than in Cape Town.”

According to Jawitz, Cape Town’s luxury rentals along the Atlantic Sea Board are definitely higher than Johannesburg’s luxury rentals. “However, Cape Town’s luxury rental market tends to be seasonal, whereas in Johannesburg it is more corporate and sustainable throughout the year.”

“The scenario changes when it comes to buying a property and getting value for money,” he says. “Despite lower salaries and earnings potential in Cape Town, the cost of buying in comparable suburbs between the two cities is significantly higher in Cape Town. This makes it especially difficult for first time buyers to enter the residential market in Cape Town.”

Take a look at some of the rental estimates provided by Just Letting agents in Cape Town and Johannesburg for a bachelor or one-bedroom flat:

The cost of living

According to Numbeo, the world’s largest database of user-generated data about cities and countries worldwide, consumer prices in Johannesburg are 12.72% higher than in Cape Town. A pair of standard jeans such as Levi’s will cost around 25% more in Johannesburg and membership to a sports or leisure club will cost around 20% more. However, this is balanced by a local purchasing power in Johannesburg, which is 4.5% higher than that in Cape Town.

Life in general

If these statistics are correct, then the verdict is simple: in Johannesburg, you’ll earn more, but you may end up spending more. “Moving from Johannesburg to Cape Town has meant that I spend less time at the shopping mall, and more time outdoors. By default, I find myself spending less on entertainment and shopping,” says Sanne, a Johannesburg local who has recently moved to Cape Town.

However, there are instances in which Cape Town can become an incredibly costly city. Restaurant prices in the tourist areas are high, taxis are pricey, and there are many boutique stores charging exorbitant prices. With lower salaries, many young Capetonians have chosen to move to Johannesburg in order to improve their financial position and increase their chances at entering the property market.

The Moneybags verdict:

Although your earning potential in Johannesburg may be markedly higher, you don’t necessarily need to move cities to make more money. Making your money work for you is a matter of managing your finances carefully, saving money by making empowered and educated consumer decisions, and investing your hard-earned cash wisely…no matter where you happen to live.

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*All prices and information correct at time of publication and subject to change thereafter.