{"id":787880,"date":"2024-08-23T11:28:59","date_gmt":"2024-08-23T09:28:59","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=787880"},"modified":"2024-08-23T11:29:04","modified_gmt":"2024-08-23T09:29:04","slug":"great-news-for-landlords-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/787880\/great-news-for-landlords-in-south-africa\/","title":{"rendered":"Great news for landlords in South Africa"},"content":{"rendered":"\n

The average cost of national rent in South Africa for Quarter 2 (Q2) 2024 is R8,785, which is R410 more than in Q2 2023 – and rental growth has come in higher than expected, even beating inflation.<\/p>\n\n\n\n

This is outlined in PayProp’s most recent Rental Index report, which said that “sometimes, the rental market surprises you,” given the sector’s expectation-beating Q2 performance.<\/p>\n\n\n\n

According to the report, on average, the most expensive provinces for rent are:<\/p>\n\n\n\n

    \n
  1. Western Cape;<\/li>\n\n\n\n
  2. Northern Cape;<\/li>\n\n\n\n
  3. Gauteng;<\/li>\n\n\n\n
  4. KwaZulu-Natal;<\/li>\n\n\n\n
  5. Mpumalanga;<\/li>\n\n\n\n
  6. Limpopo;<\/li>\n\n\n\n
  7. Eastern Cape;<\/li>\n\n\n\n
  8. Free State;<\/li>\n\n\n\n
  9. North West.<\/li>\n<\/ol>\n\n\n\n

    As of Q2 2024, the Western Cape<\/strong> remains the most expensive province for rent, with an average of R10,673, surpassing the next highest province by R1,450. <\/p>\n\n\n\n

    Despite historically slow rental growth, the province saw a surprising 9.7% increase in Q2, with annual growth accelerating to 11.7% in June, the highest since December 2017.<\/p>\n\n\n\n

    The Northern Cape<\/strong>, the second most expensive, has an average rent of R9,412 but experienced the second lowest rental growth nationwide at 2.1%. <\/p>\n\n\n\n

    This follows a period of strong growth in 2022 and early 2023 before a significant decline in late 2023 and early 2024.<\/p>\n\n\n\n

    Gauteng<\/strong>\u2019s average rent increased to R9,018, closing in on the Northern Cape\u2019s level. However, rental growth has been below average for three consecutive quarters, though it improved to 3.8% in Q2 2024.<\/p>\n\n\n\n

    KwaZulu-Natal<\/strong> had the smallest rental growth at 1.5%, with rents reaching R8,945. This low increase is partly due to reduced demand from South Africa\u2019s semigration trend. Nonetheless, this marks an improvement from Q1’s decrease and suggests a potential recovery.<\/p>\n\n\n\n

    Mpumalanga<\/strong>\u2019s average rent rose to R8,484, with growth improving to 2.4% in Q2 from 1.2% in Q1, but it remains below the national average.<\/p>\n\n\n\n

    Limpopo<\/strong> saw a robust 6.1% increase in rents, reaching an average of R8,128, making it the third highest in growth.<\/p>\n\n\n\n

    The Eastern Cape<\/strong>\u2019s average rent is R7,113, with a 5% growth rate in Q2, down from 5.6% in Q1 and marking a decline over two consecutive quarters.<\/p>\n\n\n\n

    In the Free State<\/strong>, the average rent is R6,765, up R374 year-on-year but down from the previous quarter. The 5.8% growth is notable but follows a large 9.1% increase in the prior quarter.<\/p>\n\n\n\n

    The North West<\/strong> remains the cheapest province, with an average rent of R6,362. Although its rental growth slowed to 6.3%, it remains the second highest in growth.<\/p>\n\n\n

    \n
    \"\"<\/a>
    Graphic: PayProp<\/figcaption><\/figure><\/div>\n\n\n

    Better-than-expected rental growth<\/strong><\/p>\n\n\n\n

    In the Q1 Rental Index update, PayProp initially noted a decline in rental growth for three consecutive months, predicting an end to South Africa’s post-COVID rental recovery. <\/p>\n\n\n\n

    However contrary to expectations, rental growth in South Africa made a comeback, increasing to 4.9% in April from March’s 3.6%, experienced a slight drop in May, but then surged to a post-pandemic peak of 5.2% in June – the quickest rise since December 2017.<\/p>\n\n\n\n

    This means that rental growth in Q2 grew to 4.9%, up from 3.8% in the previous quarter and the highest since Q4 2017. <\/p>\n\n\n\n

    “The sudden uptick in rental growth in Q2 2024 is a surprise piece of good news for rental agents and landlords after the previous quarter\u2019s drop,” said Head of Data Analytics, Johette Smuts.<\/p>\n\n\n\n

    This growth, driven by unexpected province performances, marks June 2024 as the first month rental growth exceeded inflation since September 2019, a positive shift for landlords and agents amid a global and local decrease in inflation to 5.1% in June.<\/p>\n\n\n\n

    “Economists are hopeful that on-target inflation figures mean that interest rate cuts can start as early as September,” although it remains to be seen whether the South African Reserve Bank will agree said Smuts.<\/p>\n\n\n\n

    Smuts told BusinessTech that “high inflation and high interest rates put financial pressure on tenants. High interest rates are a barrier to many first-time home buyers, which negatively impacts housing sales.”<\/p>\n\n\n\n

    “Rate cuts would lower bond payments and potentially draw more first-time homebuyers back to the market, reducing demand for rental properties,” said Smuts.<\/p>\n\n\n

    \n
    \"\"<\/a>
    Weighted average national rental growth rate (YoY) vs. inflation, Jan 2022 \u2013 Jun 2024. Graphic: PayProp<\/figcaption><\/figure><\/div>\n\n\n

    Smuts said that provincial rental growth is influenced by a variety of factors, including (but far from limited to): <\/p>\n\n\n\n

    1) The supply of properties, which encompasses the rate of building, developments, etc. <\/p>\n\n\n\n

    2) The demand for rental properties, which can be affected by interest rates and affordability. <\/p>\n\n\n\n

    3) Economic activity, in certain provinces.<\/p>\n\n\n\n

    \n\n\n\n

    Read: Tax warning for anyone withdrawing from the two-pot system<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

    In Q2 2024, South Africa’s average national rent rose by R410 from the previous year, with rental growth unexpectedly surging to 4.9%.<\/p>\n","protected":false},"author":101,"featured_media":786651,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[11791,19815,20416],"class_list":["post-787880","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-payprop","tag-rent","tag-south-african-rent"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/787880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/101"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=787880"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/787880\/revisions"}],"predecessor-version":[{"id":788018,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/787880\/revisions\/788018"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/786651"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=787880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=787880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=787880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}