The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year.<\/p>\n
Rental growth spiked in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.<\/p>\n
PayProp, a processor of rental payments in South Africa, said that\u00a0a rate cut could be on the cards in 2018, which is bound to provide some relief to consumers.<\/p>\n
\u201cEconomists are talking about a possible rate cut, which will boost not just the economy but also the rental and the housing market. However, nothing is set in stone and things can \u2018reshuffle\u2019 in an instant,\u201d said Johette Smuts, head of data and analytics at PayProp.<\/p>\n
Smuts cautions tenants to be prudent with any savings they may benefit from as a result of a rate cut. \u201cRate cuts can provide savings but it\u2019s key to keep those savings aside in 2018 as we feel there will most certainly be a continuance of pressures and uncertainty that we experienced last year.”<\/p>\n
Rising rent levels<\/strong><\/p>\n The PayProp Rental Index showed the weighted average national rent for Q4 of 2017 was R7,308<\/strong> \u2013 up from R6,934<\/strong> the year before.<\/p>\n Meanwhile, the weighted average national damage deposit ratio was stable throughout the year, staying between 1.27 and just above 1.28 times the average monthly rent. \u201cThis is in line with what we\u2019ve seen in previous years \u2013 since 2015, this number has varied between 1.25 and 1.29,\u201d Smuts said.<\/p>\n The average credit score improved over the last two years, showing that tenants have become a bit more savvy when it comes to managing their debts. Credit scores rose from 633 in the fourth quarter of 2015 to 635 in the last quarter of 2017. \u201cThe percentage of tenants with major delinquencies remained stable at 36% in 2017 \u2013 an improvement from two years before, when the number was 40%,\u201d\u00a0 the data specialist said.<\/p>\n Western Cape still fetching the highest rentals<\/strong><\/p>\n The Western Cape (WC) was once again the most expensive province to live in as it attracts the highest rent. Average rent in the WC stands at R8,777, followed by the Northern Cape at R8,211 and Gauteng at R7,692. All three provinces beat the national average of R7,308, while the North West boasted the lowest average rent at R4,990.<\/p>\n \u201cThe average rent in the North West was the lowest of all the provinces in Q4 in 2017, despite an increase of 8.6% from Q4 in 2016. Meanwhile the WC has been the most expensive province to rent in and one with the highest growth rate for some time now and this continued to be the case in 2017.<\/p>\n \u201cAt this stage it\u2019s too early to tell if the water crisis will have any impact on the rental market in the WC. Rentals in the WC are still rising but with the average income in the WC standing at R35,021 compared with the average national income of R32,523, tenants in the province are better equipped to deal with such increases than those in most other provinces,\u201d said Smuts.<\/p>\n Smuts believes it\u2019s unlikely that the rental market will see any relief from the volatility it experienced last year. \u201cThe volatility will in all probability continue into 2018, with the economic and political uncertainty expected to increase leading up to the national elections in 2019.<\/p>\n \u201cThe good news is that tenants appear to be in better shape than they were two years ago. Being prudent with credit and borrowing will be vital in 2018 as economic growth is still expected to be low for this year, so tenants will still feel the pressure.”<\/p>\n\n\n
\n Province<\/th>\n Average rent<\/th>\n Year-on-year<\/th>\n Average household income<\/th>\n<\/tr>\n \n Eastern Cape<\/td>\n R5 516<\/td>\n 2.5%<\/td>\n \u00a0R28 320<\/td>\n<\/tr>\n \n Free State<\/td>\n R5 490<\/td>\n 2.3%<\/td>\n \u00a0R29 383<\/td>\n<\/tr>\n \n Gauteng<\/td>\n \u00a0R7 692<\/td>\n 5.8%<\/td>\n \u00a0R30 327<\/td>\n<\/tr>\n \n KwaZulu-Natal<\/td>\n \u00a0R7 580<\/td>\n \u00a05.3%<\/td>\n \u00a0R33 681<\/td>\n<\/tr>\n \n Limpopo<\/td>\n \u00a0R7 472<\/td>\n -2.1%<\/td>\n \u00a0R28 132<\/td>\n<\/tr>\n \n Mpumalanga<\/td>\n \u00a0R6 919<\/td>\n \u00a01.6%<\/td>\n R29 724<\/td>\n<\/tr>\n \n \u00a0North West<\/td>\n \u00a0R4 990<\/td>\n \u00a08.6%<\/td>\n \u00a0R35 013<\/td>\n<\/tr>\n \n Northern Cape<\/td>\n R8 211<\/td>\n 7.9%<\/td>\n R30 683<\/td>\n<\/tr>\n \n Western Cape<\/td>\n R8 777<\/td>\n 10.8%<\/td>\n R35 021<\/td>\n<\/tr>\n \n National average<\/strong><\/td>\n R7 308<\/strong><\/td>\n <\/td>\n R32 523<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n
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