The most expensive provinces for rent in South Africa

The Western Cape remains the most expensive province to rent in South Africa, recording the highest year-on-year price growth.

This is outlined by PayProp’s Rental Index for Q3 2024, which pointed to a robust national rental market.

The report by the largest processor of residential rental transactions in South Africa noted that “strong national rental growth of 4.8% in Q3 was just a hair below Q2’s 4.9%, but it’s still the highest since Q4 2017.”

Looking at the most expensive average rental prices and their annual growth, these are:

• Western Cape:

The average rent was R10,875, with a 9.3% year-on-year growth, continuing its trend of reporting the highest rent and the highest growth in the country.

Average rentals in the Western Cape are now more than R1,400 higher than the next most expensive province.

• Northern Cape:

Average rent of R9,438, with a weak 1.9% growth. This is the second slowest growth in the country.

• KwaZulu-Natal:

Average rent of R9,010, with a 3.0% growth. While this is still the third lowest growth in the country, it is a significant improvement from the negative growth experienced at the start of the year.

• Gauteng:

The average rent was R9,047, with a below-average growth of 3.1%. This marks the fourth consecutive quarter of below-average growth for the province.

• Mpumalanga:

Average rent of R8,458, with the lowest growth in the country at 0.7%.

• Limpopo:

Average rent of R8,372, with an above-average growth of 8.4%. This is the second highest growth in the country.

• Eastern Cape:

Average rent of R7,110, with a 4.6% growth. This is the first time since Q4 2022 that the province’s growth has fallen below the national average.

• Free State:

Average rent of R6,776, with a 5.8% growth. This is the same growth rate as in Q2.

• North West:

Average rent of R6,439, with a 6.9% growth. This is the third highest growth in the country, even though it still has the lowest average rent.

Good news for the rental landscape

South Africa’s residential rental market continues on a path of strong annual growth, and despite robust rental inflation of 4.8% between July and September, tenants have seen a notable recovery in their financial position.

“Tenants have faced significant financial challenges in recent years, but these figures show that recovery is underway,” said André van Rooyen, Head of Sales at PayProp South Africa.

The average rent increased to R8,856 in Q3, yet the platform said that this did not prevent an improvement in affordability metrics.

“With affordability improving, there’s real hope for sustained financial relief in the months ahead,” he added.

The PayProp report outlined that there has been good wage growth reported during tenancy applications.

For the first time since early 2023, the index found that the average South African tenant spent less than 30% of their income on rent – a critical benchmark for affordability.

Tenants spent 44.6% of their income on debt repayments between July and September, down 2.1% from a year earlier.

As the South African Reserve Bank’s first interest rate cut since 2020 only occurred during the final month covered in this PayProp Rental Index, the average percentage of salary spent on debt repayments “will likely fall further as price adjustments follow,” said PayProp.

“Landlords and rental agents will also find plenty to celebrate,” said the company

While rental growth fell slightly from the 4.9% measured last quarter, inflation dropped more sharply, from 5.1% in June to 3.8% in September.

As a result, real-terms rental growth ended Q3 at its strongest since 2017 and increased in each month of the quarter.

With Stats SA reporting 2.8% inflation in October 2024, PayProp said that real rental returns could increase further in Q4.

“This quarter’s results offer a promising outlook for South Africa’s rental market,” said van Rooyen.

“While growth varied across provinces, the overall improvement in tenant affordability is a key highlight.

“Tenants are finding relief as income growth combines with an easing of economic pressures, balancing the impact of rising rents.

“With falling inflation and lower interest rates, tenant finances are set to strengthen more, paving the way for stronger returns on investment and a more sustainable rental market,” added van Rooyen.

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