Data from the platform, which processed more than R1.4 billion in rent in June 2024, shows that the average rent in the country rose by 4.9% year on year in quarter 2 (Q2) 2024 \u2013 the fastest growth since 2017.<\/p>\n\n\n\n
Michelle Dickens, PayProp\u2019s General Manager for Group Sales, said that new private sector residential construction numbers released by Statistics SA for the first half of 2024 as the main reason. <\/p>\n\n\n\n
The data shows that just 15,871 plans for houses, townhouses and flats were passed in H1 compared to 19 746 in the same period last year. <\/p>\n\n\n\n
“To add to the issue, confidence in the construction sector is low and many housing projects are stalling before completion,” said Dickens.<\/p>\n\n\n\n
“Reported house-building completions have dropped to just a third of what they were during the 2006-8 property boom \u2013 and are now ominously in line with the depths of the coronavirus lockdown.”<\/p>\n\n\n\n
“In the first half of 2024, just 9,623 houses, townhouses and flats were completed against 12,623 in H1 2023,” she added.<\/p>\n\n\n\n
Demand outrunning supply<\/strong><\/p>\n\n\n\n According to PayProp, residential rental supply is growing slowly \u2013 especially as many of those new homes will go to owner\u2013occupiers \u2013 while rental demand continues to grow unabated. <\/p>\n\n\n\n At the other end of the equation, the “South African population as a whole is growing at a healthy clip, driving up rental demand,” said Dickens. <\/p>\n\n\n\n According to Stats SA, there are now more than ~ 19 million households in South Africa, and almost a quarter \u2013 23.9% \u2013 live in rented accommodation.<\/p>\n\n\n\n In addition, “persistently high interest rates have caused prospective first-time buyers to delay their home purchases and keep renting for longer,” said the PayProp general manager.<\/p>\n\n\n\n Data from the PayProp Rental Index shows that more high earners are renting than in previous years: 9.3% of applicants earned R80 000 or more a month, compared to 6.8% in Q2 2022, when interest rates had just started to rise.<\/p>\n\n\n\n Dickens notes that a larger pool of higher-income applicants simplifies finding financially stable tenants with lower risk of rent arrears. <\/p>\n\n\n\n However, this has not benefitted other renters, as rising rental growth has reached its highest level since 2017 this year.<\/p>\n\n\n\n “While residential rental property remains a popular investment for hundreds of thousands of landlords, and supports property practitioner jobs across the country, the residential rental sector needs the support of a robust construction industry to deliver an affordable supply of housing to a growing population,” said PayProp.<\/p>\n\n\n\n Currently, 16% of South African households live in informal housing, and “if construction can\u2019t keep up with growing demand, they will not have a route into secure, high-quality homes,” added Dickens. <\/p>\n\n\n\n She said that lower-income tenants could also be priced out of the residential rental sector as according to the latest PayProp Rental Index, those earning R10 000 \u2013 R20 000 spend 40% of their income on rent on average and have just 6.2% of their income left over after rent and debt repayments.<\/p>\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\nProvince<\/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> ![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/08\/Average-rent-over-the-past-decade-1-1024x576.png\")
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