PayProp has published its latest rental index, showing that South Africa’s national rental growth rate remained under pressure through the second quarter of 2021, but appears to have stabilised in the short term.
Rental growth came in at 0.4% in Q2 – in line with the 0.5% growth recorded in Q1 2021.
The average national rent increased marginally from R7,746 in Q2 2020 to R7,778 in Q2 2021 – an increase of just R32 over the 12 months.
Johette Smuts, head of Data Analytics at PayProp, said the worst appears to be over for now, with the index showing a return to growth of 0.7% and 0.8% in May and June – after dipping below zero in April 2021.
Smuts said growth remains under pressure due to lower interest rates enabling renters to purchase properties, thereby decreasing the pool of available tenants.
Continued building and development in many cities has also contributed to an ongoing oversupply of rental properties, adding further sustained downward pressure on rental growth. This runs counter to the inflation position, she said.
“Inflation reached a 30-month high of 5.2% in May, driven largely by transportation costs, including petrol,” said Smuts.
She said this rise in costs of other goods and services has put pressure on already-stretched consumers.
“The aftermath of job losses due to lockdown continues to affect many consumers’ pockets, and affordability is still a major concern.”
Eastern Cape – average rent is R6,180
The Eastern Cape saw an increase of 2.1% over the same period – the highest growth rate out of all the provinces, but lower than the figure recorded in the province the previous quarter (3.2%).
The average, rent in the Eastern Cape was R6,180 in Q2, the second-lowest in the country after North West.
Free State – average rent is R6,213
The Free State saw rents decrease by 3.7% year on year. The average rent was R6,213, R242 cheaper than in Q2 2020.
If this continues, rents in the Free State could soon be the second lowest of any South African province.
Gauteng – average rent is R8,292
For the second consecutive quarter, rents in Gauteng experienced a drop from the year before.
Tenants paid on average 0.6% less per month, from R8,344 in Q2 2020 to R8,292 in Q2 2021. However, Gauteng is still the second most expensive province to be a tenant, after the Western Cape.
KwaZulu-Natal – average rent is R8,200
In KwaZulu-Natal the average rent increased by 2% from 12 months before, for an average rent of R8,200 in Q2 2021.
It was the second-highest growth experienced among the provinces, and KwaZulu-Natal is now the third most expensive province in which to rent – up from fourth last quarter
Limpopo – average rent is R7,017
In extremely welcome news for Limpopo landlords and agents, the province turned the tide with an increase in rent after 14 consecutive quarters of negative growth.
The average rent in the province increased by 0.8% to R7,017 over the 12 months to Q2 2021. The last time the province recorded positive growth figures, rents there averaged R7,741.
Mpumalanga – average rent is R7,484
While Mpumalanga experienced a 0.3% increase in average rent over the last year, it was lower than the 0.4% recorded in Q1.
In fact, it was the region’s lowest growth rate since Q4 2015, bringing the average rent to R7,484 over the quarter.
North West – average rent is R5,274
The North West is still the cheapest province for renters in South Africa, commanding an average of only R5,274 for private tenancies.
To reach this figure, rent prices increased by 0.7% year on year – significantly lower than the 3.7% of the previous quarter.
Northern Cape – average rent is R7,910
In the Northern Cape, the average rent decreased by 2.1%, from R8,081 in Q2 2020 to R7,910 in the most recent quarter – a difference of R171.
The province was one of three that measured negative rental growth in the period under review.
Western Cape – average rent is R9,185
The average rent in the Western Cape increased by 1.8% to R9,185, up from R9,022 in Q2 2020.
This was the first positive increase after four consecutive quarters of negative year-on-year rental growth. The province still has the highest average rent in the country.