Rent is going up in South Africa – here’s how much people pay in every province

Property management company PayProp’s latest annual market report for 2022 details how much average South Africans are paying on rent across the country’s nine provinces.

“Annual rental growth statistics reveal a clear upward movement in Q4. The average rent increased by 3.4% year-on-year, representing an increase of R269 from R7,906 per month in Q4 2021 to R8,175 in Q4 2022,” said PayProp.

The property company said that high commodity inflation and increasing interest rates are pressuring both landlords and tenants in 2023.

PayProp SA Deputy CEO Michelle Dickens noted that landlords are affected by the mismatch between rent escalation and inflation while rising interest rates worsen tenants’ debt-to-income ratio.

“While landlords are receiving below-inflation rent increases, each interest rate hike has put tenant affordability under increasing pressure as their debt obligations to credit providers increase,” said Dikens.

“In the most recent PayProp State of the Rental Industry Survey, 85% of agents reported “moving to a more affordable property” as one of tenants’ top three reasons for moving – up from 58% last year,” said Dickens.

This reinforces the overarching trend of affordability as the real driver behind the real estate market in 2023,” she added.

The national picture

The report’s national sentiment places inflation as the most significant risk to the rental market.

Nationally, net monthly income increased by R1,476 to R36,288 – representing a year-on-year (YoY) increase of 4.2%, said PayProp.

“While tenants will welcome any increase in income, it has not kept up with inflation which puts more pressure on tenants’ already squeezed finances,” the company said.

According to the report, tenants across the country spent an average of 29.1% of their income on rent.

When you include debt repayments of 46.6%, this leaves tenants with only 24.3% of their income to spend on food, school fees, entertainment and the like, said PayProp.

As a result, 28.5% of tenants were labelled as presenting a high credit risk during Q4 2022 – increasing by 4% compared to the corresponding period.

18% of tenants had a major delinquency against their name, compared to 16.8% in the same quarter the year before, while the average credit score worsened slightly from 646 in Q4 2021 to 641 in Q4 2022.

“These are clear signs that tenants are struggling to keep up with the rising cost of living and the increasing cost of servicing debt,” said PayProp.

The area-specific trends affecting each province across the country are listed below, as outlined by PayProp.

Western Cape 

YoY rental growth in the Western Cape remained modest during the year, ranging from 2.8% in Q1 to 3.4% in Q4, which was in line with the national average in Q4 2022.

The Western Cape remains the most expensive province in which to rent, with average rent increasing by R323 YoY to R9,737 in Q4 2022.

Tenants in the Western Cape enjoyed the highest income levels observed nationally in Q4 2022. The average income in the province was R43,263 increasing 8.9% from Q4 2021.

After spending 29.4% on rent, tenants were left with 32.6% of their take-home pay to cover their monthly expenses – the highest share of income left after debt and rent payments in the country.

KwaZulu Natal

KwaZulu-Natal’s rental growth rate followed an upward trajectory during the first three quarters of the year before dipping to 2.9% YoY in Q4 2022 – below the national average of 3.4%.

Rent increased by R246 to R8,632 over the same period, the third highest out of the nine provinces.

The average net income for KwaZulu-Natal tenants in Q4 was R35,903, up 3% from the same quarter the year before. This lagged the national growth rate of 4.2% and income of R36,288.

After paying rent, tenants had a disposable income of 24% of their take-home pay to cover monthly expenses – more than the 21.8% they had available the year before.

Northern Cape

The Northern Cape had the highest YoY rental growth out of all the provinces in Q4, at 8.1%. The area returned strong rental growth figures last year, leading the pack in the first three quarters.

Average rent measured at R8,962 in the last quarter, up R675 from R8,287 in Q4 2021.

Northern Cape tenants’ average income, at R29,241 in Q4 2022, was the lowest in the country – almost R7,000 less than the national average income recorded.

31% was spent on rent, leaving tenants with 24.1% of their income to cover monthly expenses – in line with the 24.2% observed nationally.

Gauteng

The average rent in Gauteng increased by 3.6% during Q4 – the highest YoY growth rate observed during the year and slightly above the average national growth rate of 3.4%.

Rent increased by R301 to R8,554 in Q4 2022 from R8,253 in Q4 2021. The province has the fourth-highest average rent in the country.

Gauteng tenants’ average income increased by 2.4% YoY from Q4 2021 to Q4 2022 and amounted to R36,338 in the most recent quarter.

This was slightly above the national average income and the fourth highest out of the provinces.

29.5% was spent on rent (Q4 2021: 28.6%), leaving Gauteng tenants with 21.5% of their net income to spend on food, fuel and other necessities – 2.5% more than in 2021.

Mpumalanga

Mpumalanga experienced a decelerating rental growth rate, slipping to 1.9% in Q4 – below the 3.4% national average

This equated to an increase of R145 YoY, with the average rent in the province measuring R7,936 in Q4.

The average income in the province during the fourth quarter of 2022 was recorded as R37,837, the third-highest income out of all the provinces.

Tenants spent only 26.9% of their income on rent, below the national average of 29.1%, leaving an average of 25.8% disposable income to cover other monthly expenses.

Limpopo

In Limpopo, rent continued to increase well above the average national growth rate during 2022, with rental growth of 5.1% recorded in Q4 – the third-highest growth rate seen during the quarter.

Tenants earned an average net monthly income of R31,747 during the last quarter – less than R200 from 2021.

This meant that 34.5% of their income was spent on rent – the highest percentage observed across the provinces – leaving only 18.9% of their net income to buy monthly necessities.

Free State

The fall of 1.6% in Q4 resulted in the lowest growth rate out of all the provinces for the quarter.

Average rent decreased by R105 YoY, from R6,512 in Q4 2021 to R6,407 in Q4 2022. The average rent in the province was the second lowest out of all the provinces.

In the Free State, An average net monthly income of R29,636 was recorded, the second lowest in the country. They also spent 29.6% of their income on rent, leaving only 21.8% as disposable income, compared to 28.8% in the same quarter in 2021.

Eastern Cape

Average rent in the Eastern Cape increased by 2.1% YoY, from R6,407 in Q4 2021 to R6,543 in Q4 2022. This was the lowest growth rate observed in the province throughout the year.

Rental growth in Q4 was below the national average of 3.4%, and rent in the province was the third lowest out of all the provinces.

The average income in the Eastern Cape increased by 5.8% to R31,702 from R29,954 the year before, higher than the average national increase of 4.2%. Residents spent 29.3% on rent, leaving tenants with 27.5% as disposable income.

North West

The North West saw a growth rate of 7% YoY, more than double the national average but still trailing the Northern Cape.

Average rent increased by R377 YoY to R5,760 in Q4. Despite the high rental growth, the province remains the cheapest to rent.

In the North West province, the average income in Q4 was R38,225 – up 6.1% from the same quarter the year before – the country’s second-highest average income and third-highest income growth.

PayProp noted, however, that most of the rentals are to students, and therefore, income rates are recorded through parent credit checks.

With the lowest average rents in the country, North West tenants spent only 21.8% of their income on rent – the lowest in the country. That left them with 24.5% of their income to cover monthly expenses.

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