Renters in South Africa taking pain
Over the past decade, rental prices in South Africa have seen a noticeable increase, with tenants dedicating more of their salaries to ensuring that they have a roof over their heads.
With one province’s average rent increasing by over 55% over the past ten years, the cost of living has been hurting many bottom lines.
Since 2014, the national average of rent has risen from R6,247 to R8,654 per month – with tenants increasing the proportion of their salaries dedicated to rent from just over 20%, to between 26.6% and over 30% in Q1 2024.
This data is contained in the residential rental payment and reconciliation platform PayProp’s quarterly and annual rental indexes over the past decade, which provide comprehensive overviews and analyses of state and national rental growth, tenant credit metrics, and arrears.
Over the last ten years, the average non-agricultural formal salary in South Africa has grown by 81.9%.
Inflation over the same period was around 62.3%, meaning the average salary has grown at a rate higher than inflation—19.6% in real terms.
While the average salary over the last decade has increased, it does not tell the whole story.
The average salary reflects varying increases across all formal sectors—including government and public services, where salary hikes in the past have been notorious for being higher than inflation.
Headline inflation over the past ten years also does not reflect the huge increases seen in specific sectors: such as the 131% surge in car prices, or the electricity price hikes seen over the years.
According to the Q1 2024 PayProp report, the percentage of tenants in arrears has leapt to 18.3%, highlighting an increase in burdened consumers.
This indicates that other increases in essential cost-of-living items have eaten into any salary hikes over the past decade, meaning South Africans have still had to fork out a bigger portion of their salaries for rent – often being unable to pay their bills..
These abovementioned figures differ from province to province; however, rental increases have all been below 60% inflation for this period.
| Province | Q4 2014 Average Rent | Q1 2024 Average Rent | % increase |
| Western Cape | R6,609 | R10,300 | 55.9% |
| Northern Cape | R6,680 | R9,274 | 38.8% |
| Gauteng | R6,677 | R8,943 | 33.9% |
| KwaZulu-Natal | R6,367 | R8,770 | 37.7% |
| Mpumalanga | R6,779 | R8,369 | 23.5% |
| Limpopo | R6,288 | R8,027 | 27.7% |
| Eastern Cape | R4,981 | R7,021 | 41.0% |
| Free State | R4,764 | R6,927 | 45.4% |
| North West | R4,460 | R6,301 | 41.3% |
Although the rental increases have generally been below inflation, the average proportion of salaries dedicated to paying rent has increased quite significantly during the same period.
For example, a recent survey conducted by short-term lender Wonga found that South Africans are cutting back on food and groceries to keep paying for other essentials like rent, highlighting an increasing cost of living crisis.
Looking at the the comparisons, the biggest increases in average rental costs per province can be seen in:
- Western Cape (+55.9%);
- Free State (+ 45.4%);
- North West (+41.3%).
When it comes to the standings of the priciest provinces in PayProp’s Q4 2014 report, Mpumalanga sported the most expensive average rent at R6,779 per month a decade ago.
However, this has shifted significantly over the past decade – with the Western Cape rising from being the fourth most expensive, to the long-standing position of the priciest province, largely thanks to quite the influx in people moving to the Mother City.
Its average rent has increased by 55.85% from R6,609 in Q4 2014, to R10,300 in Q1 2024 – more than R1,000 more than second place Northern Cape.
The Western Cape continues to stand out due to its low flat vacancy rate of 2.3% in Q1 2024, according to the Rodes Report.
The rental landscape
In the Q4 2023 PayProp Rental Index, it was reported that quarterly South African rental growth had slowed after eight booming quarters.
For Q1 2024, there was a quarterly average growth of 3.8% – the lowest quarterly increase since Q4 2022, “suggesting that the post-pandemic rental growth recovery is well and truly over,” said PayProp.
The group attributed it to a pressing issue – “falling tenant affordability.”
In South Africa, the Consumer Price Index shows inflation within the 3-6% target range, but remains stubbornly at the top end despite a prolonged period of high interest rates – consistently outpacing rental growth.
“That creates a dilemma for the SARB: an interest rate cut would make borrowing cheaper and reduce downward pressure on economic growth, but it could also boost consumer demand and fuel higher rises in inflation,” said PayProp.
PayProp predicts that “stubborn inflation and the slimming chance of a rate cut this year means that the pressure on tenant affordability and housing sales is unlikely to let up either.”
The number of South Africans unable to pay rent is rising, and burdensome legal processes mean landlords have to sit and pay rates and taxes for property with tenants who live rent-free for months and, in some cases, years.
Speaking to eNCA, attorney at Ulrich Roux and Associates Cameron Phillips said cases of tenants not paying are common in South Africa, and the law protects the tenants.
“With the current economic climate, we [South Africa] have seen this problem become more serious.
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