From tenants in arrears to rising rental rates, here’s what landlords and tenants need to know about South Africa’s rental market
The rental market has come alive again. Landlords will be pleased to hear that recent data from PayProp indicates that rental rates for the first half of this year saw the most significant growth since 2017. This is quite an achievement, especially considering the prevailing economic conditions and the anticipated pressures on tenants.
By mid-year, the year-over-year (YoY) growth in rentals touched a national average of 4.4%. Even though there was a modest slowdown in June compared to April and May, the national average rent comfortably sits at around R8,375/month.
Interestingly, the national rental escalation has outstripped national house price growth for the first time since the COVID-19 pandemic. FNB's January data showcases this with a 4.14% growth in rentals as opposed to a 2.3% rise in house prices.
While landlords have reason to enjoy this upward trend, tenants are expected to experience pressure from the impact of higher interest rates.
For Tenants: Average Prices in Today’s Rental Market
Whether you're seeking the best value, weighing up metropolitan allure, or simply curious about how provinces stack up, we've broken down the latest rental averages and growth insights.
Here's a snapshot of the rental market across key provinces to help you make informed decisions on your next home.
- Gauteng: The average rental in Gauteng now stands at R8,691/month, reflecting a 4.5% YoY rental growth. Although the Gauteng sales market faces challenges, its rental market shows resilience and continues to be the most affordable among the country's three major metros.
- Western Cape: With an average rental of R9,730/month and a YoY growth of 2.8%, the Western Cape remains the most expensive province to rent in. According to Seeff’s Property Practitioners, the province's luxury homes and apartments command some of the highest rental rates nationwide.
- Kwa-Zulu Natal (KZN): Rentals in KZN average R8,817/month, with a YoY growth of 4.4%. This is a deceleration from the 5% growth seen in the first quarter. However, rentals in the province remain above the national average.
- Northern Cape: The Northern Cape's average rental is R9,216/month, marking a 6.8% growth in the second quarter. Despite this growth slowdown, the rental rate has risen significantly over the past few years, placing the Northern Cape as the second priciest province for tenants.
- Eastern Cape: Here, the average rental rate is R6,777/month, achieving an impressive YoY growth of 5.1%, which is above the national average. Nevertheless, the Eastern Cape remains a more budget-friendly option for tenants.
- Free State: The average rental in the Free State stands at R6,391/month. With just 1% YoY growth, it's the slowest growth in the country. However, the province's rental market remains one of the more affordable, especially given its modest growth.
- Mpumalanga: Mpumalanga's average rental is now R8,281/month, boasting a YoY growth of 5.2%, which surpasses the national average. Although rental rates are increasing, they still hover slightly below the country's average.
- Limpopo: The average rental in Limpopo is R7,663/month, with a YoY growth of 4.3%. This rate is slightly slower than the previous quarter but aligns with the national average. Rentals are on an upward trend but still fall below the national average.
- North West: With an average rental of R5,985/month, the North West experienced the highest YoY growth in the country at 9.3%. Despite this outstanding growth, it remains the most affordable province for tenants, with rates considerably lower than the national average.
For Landlords: Tenant Arrears in Today’s Rental Market
Recent data from TPN Credit Bureau highlights that 18.4% of tenants are now behind on their payments, a slight uptick from the previous quarter. While this is concerning, it's worth noting that these figures are still more favourable than the highs of 20.8% to 24.9% seen during 2020.
Though tenant distress levels remain relatively controlled, the ripple effects of the interest rate hike are anticipated to become more pronounced as we move through the year. Given these dynamics, Seeff’s Property Practitioners strongly advise landlords to align rental increases with prevailing economic and real estate market trends.
Landlords, be mindful: setting your rental rates excessively high could mean longer vacancies or tenants seeking more budget-friendly alternatives. To navigate these waters successfully and ensure optimal returns, Seeff Property Group recommends you consult a seasoned and reputable rental agency.
Tenants, if you want to increase your chances of securing your dream rental, read Seeff’s guide on the qualities landlords look for in tenants. You may also be interested in the top rental property trends.
If you’re a landlord, we encourage you to understand your responsibilities as a landlord in South Africa. If you’re a first-time landlord, get your pressing questions answered by Seeff. Let us help you navigate the rental market with confidence.
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