New record for the average rent paid in South Africa

For the first time ever, the average rent in South Africa is over R9,000, thanks to lower inflation and high demand.

This is according to PayProp’s latest Rental Index Report for the fourth quarter of 2024, which highlighted that the national average now sits at R9,051.

This marks a notable increase of R453 compared to a year earlier and R195 above the third quarter of 2024. 

The report attributed the rise in average rent to lower inflation and strong tenant demand, reflecting growing confidence in the residential rental market by the end of 2024.

PayProp’s report said that rental growth in South Africa has made a remarkable recovery from the post-pandemic slump. 

In the fourth quarter, year-on-year rental increases were recorded at 5.0% in October, 5.2% in November, and 5.4% in December. PayProp pointed out that December’s growth rate was the highest since 2017. 

“This resurgence is largely due to easing inflation, which provided relief to tenants’ finances and allowed landlords and agents to implement their first real-term rental increases in several years,” it said. 

The report explained that rental growth had been sluggish for most of 2024, with a low of 3.8% in the first quarter, sparking concerns that the market had levelled off. 

However, the situation improved throughout the year as inflation declined, bolstering tenant affordability.

PayProp noted that landlords and agents, who had been cautious about raising rents due to the economic uncertainty following the pandemic, were now more confident in increasing rental prices. 

“The high demand for rental properties, coupled with economic recovery, suggests that the market is well-positioned for continued real-term growth,” the report said. 

It also explained that interest rates have played a role in driving rental growth. Although rent payments do not carry interest, movements in interest rates indirectly influence tenant affordability.

This is because interest rates affect other expenses like credit card payments, car loans, and personal loans. 

As these financial pressures eased, tenants were better able to afford higher rents, contributing to the overall growth observed.

Provincial breakdown

Looking at the separate provinces across South Africa, the report noted that some have seen stronger growth than others. 

In the Western Cape, the average rent soared to R11,141 in the fourth quarter of 2024, exceeding R11,000 for the first time. 

This represents a year-on-year increase of R1,023, highlighting the province’s exceptional rental market performance. 

PayProp noted that while the Western Cape has always been known for high rental prices, growth had generally aligned with national averages until a sudden surge to near-double figures in the second quarter of 2024. 

Despite the high costs, healthy arrears figures indicate that tenants in the province are managing to keep up with payments. The report highlighted that affordability may be less pressured here than in other parts of the country.

The Northern Cape maintains its position as the province with the second-highest average rent, reaching R9,657 in the fourth quarter, up R248 from the previous year.

However, the gap between the Northern Cape and the Western Cape continues to widen. Gauteng remains in third place with an average rent of R9,169, showing a year-on-year increase of R305. 

However, KwaZulu-Natal is close behind at R9,147, just R22 less than Gauteng. KwaZulu-Natal’s rental growth outpaced Gauteng in the fourth quarter, suggesting it may soon reclaim third place after losing it in mid-2023.

Limpopo experienced significant growth, with the average rent rising to R8,797, a year-on-year increase of R878. 

This put the province above Mpumalanga, positioning it as South Africa’s mid-ranked region for rental costs. 

In contrast, Mpumalanga recorded the lowest growth, with an average rent of R8,439, up just R16 from the previous year.

In the Free State, the average rent increased by R247 to R7,216, maintaining its status as the province with the second lowest rents. 

The Eastern Cape saw rents rise by R279 to R7,297, the third lowest in the country. These two provinces continue to compete closely, but the Eastern Cape remains slightly ahead for now.

The North West continues to have the lowest average rent in South Africa at R6,798, despite a year-on-year increase of R454. However, the gap between the North West and the Free State is narrowing.

Despite some concerns in certain provinces, PayProp noted that as the economy continues to stabilise and interest rates remain favourable, South Africa’s rental market is in a good position to see more growth in 2025.