The province with the cheapest rent in South Africa

The latest PayProp Rental Index shows that the North West has the cheapest rent in South Africa, even if prices are growing faster than the rest of the nation.

According to the index, South Africa has seen the eighth consecutive quarter of rental growth in Q3 2023, with landlords seeing year-on-year earnings growth of 4.6% – the highest since the peak of 5.3% in Q4 2017.

South Africa’s average rent now stands at R8,451 – R368 more than in Q3 2022 and R76 more than in Q2 2023.

Although inflation remained within the South African Reserve Bank’s target range of 3%-6% for the whole quarter, inflation still remained above rental growth in all months except July, which saw rent increases of 4.7%.

Johette Smuts, head of data analytics at PayProp, said it remains to be seen if the September uptick to 5.4% is a cause for concern for the rental market.

“If inflation remains a risk, that will limit SARB’s scope for rate cuts, keeping consumer credit expensive while also putting continued pressure on tenants’ finances,” said Smuts.

“On the other hand, high interest rates also deter homebuyers, increasing demand for rental properties and providing more scope for rental increases.”

“And while this would add further pressure on tenants, landlords would benefit. The SARB Monetary Policy Committee has warned that core inflation appears sticky, so significant rate cuts are unlikely in the near future.”

Cheapest province

All provinces experience positive year-on-year rental growth, with all provinces, except KwaZulu-Natal and the Northern Cape, seeing faster growth in Q3 than Q2.

Overall, the North West province saw the fastest growth of all provinces in Q3, with 9.3%.

The province’s rent is the lowest in the country, but it grew to R6,021 from R5,985 in Q2 – the first time it passed R6,000.

Gauteng also took KwaZulu-Natal’s position as the third most expensive for renters in the province, with renters now paying R8,777 per month.

The Western Cape is the most expensive province for rent at R9,946, whilst the Northern Cape is second at R9,262.

Boost for tenants

Although rent continues to increase across the country, the percentage of tenants in areas has called in Q3 2023 after two straight quarters of growth, with the number of tenants behind on rent dropping to 18.4% in Q2 from 17.5% in Q3 2023 – the lowest level since PayProp started tracking areas in 2020.

The percentage of rent owed on average by tenants in arrears also dropped from 77.1% in Q2 2023 to 74% in Q3 – the lowest level recorded since 2020. 

“It’s encouraging to see the improvement in arrears despite many tenants still experiencing a substantial squeeze on their finances from the rising cost of debt repayments,” said Smuts.

That said, she warned property professionals that the upcoming festive season might see an increase in arrears as tenants prioritise seasonal spending over rental repayments. 

“As we enter the holiday season, it’s uplifting to review positive data in the Rental Index. Landlords and agents will welcome the fact that growth has accelerated every quarter for two years, and each province has individually seen growth for the second consecutive quarter.

“In addition, arrears have fallen to their lowest level since before the pandemic, showing that tenants’ position has improved and closing the quarter off on a positive note.”

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