PayProp has published its latest rental index, showing that for the second consecutive quarter, year-on-year (YoY) property rental price growth hit an all-time low in Q3 2020.
This follows a general downward trend for the year, with May and September being the worst months, data from the property group shows.
“Lacklustre growth continued even after most South Africans returned to work,” PayProp said.
“Because so many households suffered a partial or total loss of income this year, many are worse off financially compared to the beginning of the year, when economic pressures were already in effect.
“In the circumstances, affordability continues to be a major factor in persistent low rental growth.
“With many short-term lets reallocated to the long-term rental market. To avoid standing empty while travel restrictions were in place, the market has essentially been flooded with supply, adding to existing downward pressure on rental growth.”
This has been compounded by inflation which has rebounded after the hard lockdown and is now in the 3% range.
As demand for goods is one of the main drivers of inflation, the restrictions on the purchase of goods during hard lockdown explain low inflation levels during April and May, PayProp said.
PayProp said that most provinces followed the national trend, experiencing further downward pressure on rental growth.
Eastern Cape – average rent is R6,213
The Eastern Cape’s rental growth rate bounced back in Q3. The province had the highest growth rate of all at 6.6%, but the average rent in the province came in at just R6,213, the second-lowest in the country for that quarter.
Free State – average rent is R6,455
The Free State reached the second-highest growth rate in the country at 4.1% for the quarter – albeit 2.5 percentage points behind the Eastern Cape.
The province has endured three consecutive quarters of falling growth rates. It’s hard to believe that, just nine months ago (Q4 2019), it achieved YoY growth of 8%.
Gauteng – average rent is R8,432
Gauteng growth rates have been decreasing over the past two quarters, measuring 3.2% in Q3.
This was the third-highest growth rate observed in the country. At R8,432, the average rent in the province ranked second highest of all the provinces.
KZN – average rent is R8,123
KwaZulu-Natal rental growth rates picked up in Q3, but at -0.9% (vs. -1.6% in Q2), growth was still negative. The average rent came in at R8,123, down from R8,197 the previous year
Limpopo – average rent is R6,881
Limpopo has been experiencing negative growth for more than two years. YoY rent levels declined by 3.7% in Q2 and 3.9% in Q3 2020 – dragging the province to the bottom of the growth charts in South Africa.
Average rent in Q3 was R6,881, down from R7,160 the year before and R7,741 in Q3 2017.
Mpumalanga- average rent is R7,442
Mpumalanga was one of three outlier provinces achieving a higher growth rate in Q3 than Q2.
Third-quarter rents increased by 1.9% compared to the previous year – making it the fourth and final province with above-average rental growth. Overall, the province recorded an average rent of R7,442.
North West – average rent is R5,147
North West province maintained the cheapest average rent in the country at R5,147. In Q3, the province experienced negative rental growth for the first time in seven quarters, even if it was a minimal decline (-0.2%).
The previous quarter’s growth came in at 3.9%, compared to a rental growth rate of over 10% in Q3 2019.
Northern Cape – average rent is R7,979
As the fourth most expensive province to rent a home in the country, the Northern Cape had an average rent of R7,979 in Q3 2020. That was up just a fraction (0.2%) over the year before – less than R20.
Western Cape – average rent is R9,041
The Western Cape is still the most expensive province in South Africa for renting a property, with an average rent of R9,041.
With a decrease in rental prices of 0.4% from the year before, the province has now had its second consecutive quarter of negative growth (rent decreased by 0.04% in Q2 2020, or R3.