South Africa’s rental market is seeing a shift – here’s what people are paying right now

PayProp has published its latest rental index, showing South Africa’s rental growth rebounded in the first quarter of 2022, with year-on-year (YoY) growth of 1.5%, 1.1% and 3% recorded in January, February and March respectively.

The March figure was the strongest performance recorded since the start of the pandemic, a positive sign, the group said. However, PayProp noted that increasing pressure on consumer spending in the coming months could impact growth going forward.

“The current high inflation rates in the country could be pushed further up by accelerating global inflation – driven by higher oil prices since the Russian invasion of Ukraine in February.

“Central banks worldwide are responding by increasing interest rates to curb inflation, which will dampen economic growth and could affect South African  tenants’ incomes and job security, putting downward pressure on rental growth rates.”

What people are paying

• National: PayProp’s data shows that nationally rents increased by 1.8% YoY between Q1 2021 and Q1 2022, bringing the average rent to R7,958 in the first quarter of 2022, up from R7,819 a year earlier.

• Eastern Cape: In the Eastern Cape, rents increased by 2.6% YoY in Q1 – slightly below the 2.8% of Q4 2021 – to end the first quarter at R6,365, the second-lowest out of all the provinces.

• Free State: At 0.8% the Free State increase was the second-lowest of any province in Q1, but property professionals will welcome any positive growth. The province recorded negative YoY rental growth during every quarter of 2021. The average rent of R6,418 in the first quarter was the third lowest out of the nine provinces.

• Gauteng: Gauteng was the only province that recorded negative YoY growth during the first quarter of 2022. The average rent there decreased by 0.1% (R11) in Q1 2021 to R8,379 in Q1 2022. Gauteng was the fourth most expensive province in which to rent in the quarter, just R2 behind KwaZulu-Natal.

• KZN: Rents in KwaZulu-Natal increased by 2.5% over the quarter, ending it at R8,381 versus R8,177 in Q1 2021. The province had the third-highest average rent after the Northern Cape and Western Cape, but competition is strong here – average rent in Gauteng was only R2 lower than in KwaZulu-Natal, while in the Northern Cape it is just R13 higher than in KZN.

• Limpopo: Limpopo’s hot streak continued in Q1 2022, having recorded positive growth in each of the past six quarters. The average rent in the province increased by 4.6% in that period, the second-highest increase after Mpumalanga, with tenants paying on average R7,189 per month over the three months.

• Mpumalanga: Mpumalanga recorded the highest rental growth rate in Q1 – 5.3% year-on-year – making it the second quarter in a row of it being top of the leader board (having notched up 3.8% in Q4). Average rent in Q1 2022 was R7,866.

• North West: Rents in North West increased by 2% between Q1 2021 and Q1 2022, above the national average of 1.8%. The province retained its spot as the cheapest province in which to rent, although this is partly due to a high number of student rentals managed through PayProp. Average rent of R5,521 was recorded in Q1.

• Northern Cape: Northern Cape rent increased by 0.8% in Q1 – from R8,327 in the same quarter in 2021 to R8,394, after increasing 3% in the quarter before. Average rent in Q1 was the second-highest out of all provinces – if only just.

• Western Cape:  The fight for second place has been fierce, but for years there’s been only one clear leader when it comes to rent prices. The Western Cape remained the most expensive province for tenants after a healthy increase of 2.8%, from R9,142 in Q1 2021 to R9,399 in Q1 2022.

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