{"id":786428,"date":"2024-08-13T16:00:00","date_gmt":"2024-08-13T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=786428"},"modified":"2024-08-13T14:57:56","modified_gmt":"2024-08-13T12:57:56","slug":"renters-in-south-africa-taking-pain","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/786428\/renters-in-south-africa-taking-pain\/","title":{"rendered":"Renters in South Africa taking pain"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Since 2014, the national average of rent has risen from R6,247 to R8,654 per month \u2013 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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Over the last ten years, the average non-agricultural formal salary in South Africa has grown by 81.9%.<\/p>\n\n\n\n

Inflation over the same period was around 62.3%, meaning the average salary has grown at a rate higher than inflation\u201419.6% in real terms.<\/p>\n\n\n\n

While the average salary over the last decade has increased, it does not tell the whole story.<\/p>\n\n\n\n

The average salary reflects varying increases across all formal sectors\u2014including government and public services, where salary hikes in the past have been notorious for being higher than inflation.<\/p>\n\n\n\n

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<\/strong><\/a>, or the electricity price hikes<\/strong><\/a> seen over the years.<\/p>\n\n\n\n

According to the Q1 2024 PayProp report, the percentage of tenants in arrears has leapt to 18.3%, highlighting an increase in burdened consumers.<\/p>\n\n\n\n

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 \u2013 often being unable to pay their bills..<\/p>\n\n\n\n

These abovementioned figures differ from province to province; however, rental increases have all been below 60% inflation for this period.<\/p>\n\n\n\n

Province<\/strong><\/td>Q4 2014 Average Rent<\/strong><\/td>Q1 2024 Average Rent<\/strong><\/td>% increase<\/strong><\/td><\/tr>
Western Cape<\/td>R6,609<\/td>R10,300<\/td>55.9%<\/td><\/tr>
Northern Cape<\/td>R6,680<\/td>R9,274<\/td>38.8%<\/td><\/tr>
Gauteng<\/td>R6,677<\/td>R8,943<\/td>33.9%<\/td><\/tr>
KwaZulu-Natal<\/td>R6,367<\/td>R8,770<\/td>37.7%<\/td><\/tr>
Mpumalanga<\/td>R6,779<\/td>R8,369<\/td>23.5%<\/td><\/tr>
Limpopo<\/td>R6,288<\/td>R8,027<\/td>27.7%<\/td><\/tr>
Eastern Cape<\/td>R4,981<\/td>R7,021<\/td>41.0%<\/td><\/tr>
Free State<\/td>R4,764<\/td>R6,927<\/td>45.4%<\/td><\/tr>
North West<\/td>R4,460<\/td>R6,301<\/td>41.3%<\/td><\/tr><\/tbody><\/table><\/div>
Source: PayProp<\/em><\/figcaption><\/figure>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n

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National average of tenant disposable income 2014. Source: PayProp Rental Index 2014<\/figcaption><\/figure><\/div>\n\n
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The national average of tenant disposable income 2023. Source: PayProp Rental Index Q4 2023<\/em><\/figcaption><\/figure><\/div>\n\n\n

Looking at the the comparisons, the biggest increases in average rental costs per province can be seen in:<\/p>\n\n\n\n