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TimesLIVE
a day ago
- Business
- TimesLIVE
Western Cape tops SA rental charts as prices soar past R11,000
The figures showed the Western Cape has a growing appeal among high-net-worth individuals and international investors. 'The sustained influx of people to the metros in search of better economic opportunities is expected to continue fuelling demand for rental accommodation. Additionally, semigration trends to coastal areas, the Cape in particular, will probably continue to drive higher demand and higher average rentals in the Western Cape,' said Seeff. According to Seeff, the average national rental exceeded R9,000 per month by the end of 2024, which was a milestone that reflected strong demand and economic pressure on tenants. 'The past year was relatively good for the residential rental market, with rents trending higher. According to rental property barometers, landlords enjoyed positive rental income growth.' Rental income growth stood at 5.2% for the last quarter of 2024, significantly outpacing the national average house price growth of 0.8%. However, this rental growth tapered as the year progressed. 'The Eastern Cape enjoyed growth of 7.3% in 2023, but it fell to 4% at the end of 2024. Rental growth for the Free State reduced from 9.1% in the first quarter of 2024 to 3.5% by year-end.' The figures showed other provinces also experienced a slowdown: Mpumalanga: ended the year with 0.2% growth; Northern Cape: improved slightly but closed the year at 2.6%; Gauteng: ended with 3.4% growth; and KwaZulu-Natal: recovered to end with 4.5% growth. Conversely, the North West and Limpopo stood out for strong performances as North West showed a 7.2% growth in Q4 2024 and Limpopo had 11.1% growth which was well above the national average. The Seeff Group believed economic conditions and interest rates would remain critical factors in shaping the rental landscape but also cautioned against unrealistic rental escalation expectations. 'If both improve, as expected, landlords can probably look forward to another good year. Landlords are cautioned to remain mindful of the economic pressures. Raising rents above the average rates may result in increased vacancy rates.' Additionally, tenants are becoming more value-conscious amid cost-of-living challenges. 'Tenants are increasingly prioritising value for money, seeking smaller, more efficient units in well-located areas.' Seeff also highlighted an encouraging trend of fewer tenants falling into arrears. Data from PayProp for the final quarter of 2024 showed only 17.1% of tenants were in arrears. 'Tenants are still spending about 44.1% of their income on rent, largely due to low-income growth and the impact of high interest rates.' Tenant screening and professional property management are becoming more critical. 'Working with a credible rental agency, whether to source a tenant or manage your rental property, is a definite advantage in the current market. By doing so, landlords can mitigate risk and maintain a stable rental income stream.'
The Citizen
3 days ago
- Business
- The Citizen
Average rent in Gauteng tops R9k: How do other provinces measure up?
Western Cape remains the most expensive province to rent in, while the Northern Cape has overtaken Gauteng in rental costs. Everyone needs a place to call home, but for many South Africans, owning one is out of reach. Renting becomes the next best option, unless you are staying with your parents. Still, even renting comes at a high price. For most, rent consumes a significant portion of their salary. According to the latest PayProp Rental Index, the average rent in Gauteng, South Africa's land of opportunities, now sits at R9 201. But Gauteng is not even the most expensive province to rent in. The province remains the country's most populated, with the highest population driven by the hope of better opportunities, whether it is landing a job, launching a business, or starting a new life. Cheapest province to rent a place The Index's findings are based on the first quarter of 2025, utilising transaction data from the R1.4 billion in rent that PayProp processes each month, along with credit scoring from Experian. North West, home to Sun City, retained its position as the cheapest province to rent a place in, at R7 153, which is an increase of R852 compared to the previous year. What is surprising is the share of tenants that are in arrears in the North West, as the percentage remains significantly high. Two quarters ago, North West was the second-highest province in the country, with 22.9% of its tenants being in arrears. In this quarter, the province has 18.6% of tenants in arrears. Most expensive province to rent a place As expected, the Western Cape remains the most expensive province in which to rent a place. The Index highlights that the province has had the highest rents in the country during the first quarter of 2024, but only average rental growth, just as it has for the past several years. 'The province experienced the highest growth in South Africa in the second and third quarters, and reached double digits in the fourth quarter,' reads the Index. It would cost you an average of R11 285 to rent a place in the Western Cape, which is R985 more than the previous year. Rent in the province is R1 704 more than the second most expensive province to rent in. '13.7% of Western Cape tenants were in arrears in Q1 2025, 0.5% more than the previous quarter. Tenants in arrears owe 60.2% of the average rent, once again the lowest in SA and down by 0.7% from the previous quarter.' ALSO READ: The ups and downs of Cape Why is the Western Cape loved? Johannesburg was once home to South Africa's wealthiest individuals. However, the tables have turned, with the country's most centi-millionaires now found in Cape Town. Henley & Partners' Centi-Millionaire Report for 2024 outlined that Cape Town has taken the crown due to high hopes of better governance, improved service delivery and greater safety. 'Other factors that come into play when these wealthy individuals make a decision to relocate include the economy, the tax environment, business and investment opportunities, and privacy and security,' read the report. The report listed Cape Town as the most loved holiday destination in the country, with more than 150 centi-millionaires owning second homes in the city. The Mother City is the only city that shows as the elites' favourite holiday destination in the country. Rent in Northern Cape Renting a property in the Northern Cape is more expensive than renting in Gauteng. The Index revealed that the average rent in the province is R9 581, while it is R9 201 to rent in Gauteng. Rent in the Northern Cape is now R307 more than a year earlier, and it remains the second highest in the country. 'The share of tenants in arrears fell to 18.9% in Q1 2025, 0.1% below the previous quarter and 1.9% lower than a year earlier. 'However, the amount they owe rose sharply, from 65.7% last quarter to 71.1% in the latest stats. Even so, this is still well below average.' ALSO READ: Are municipalities failing — or are residents just unable to pay? Why many are turning to off-grid living The fall of Gauteng Gauteng is the geographically smallest province in the country, and its average rent for the first quarter of 2025 increased by R258. The Index is of the view that unless rental growth in Gauteng turns around, it could easily lose its place on the podium this year. '15.6% of tenants owed rent, down from 16.3% in Q4 and the second-lowest share in SA. However, tenants in arrears owe an above-average 86.0% of rent. This is down compared to last quarter's 89.2%, but it is still the second-highest in SA.' The City of Gold has experienced deteriorating service delivery, rising crime rate, mismanagement of public funds, corruption, and collapsing infrastructure, among other issues. What about other provinces The fourth most expensive province to rent in is KwaZulu-Natal, with the average rent being R9 170, an increase of R400. 'The percentage of tenants in arrears in KZN is also unchanged since last quarter, at 19.4%. This is the third-highest percentage in SA, but still the lowest it has been in the province in over five years. 'On the other hand, tenants in arrears owe a below-average 73.5% of rent that has nevertheless risen from last quarter's 71.7%.' Sitting at number five is Limpopo. The average rent in Limpopo is R8 899, R872 more than a year previously. 17.1% of tenants owed rent in Q1, 0.1% more than the previous quarter and still the third lowest in the country. 'However, things have got worse for those already in financial difficulties. The average arrears percentage climbed from 71.8% in the fourth quarter of 2024 to 80.4% in the first quarter of 2025, meaning its tenants now owe the third-highest percentage of rent of any province.' ALSO READ: Warning for South Africans buying homes Mpumalanga, Free State and Eastern Cape According to the Index, Mpumalanga sits in sixth position, with average rent being R8 460, just R91 more than a year earlier. '20.1% of tenants in the province now owe their landlords rent, the second-highest percentage in SA and up from 19.6% last quarter.' The Free State sits in the seventh position, with an average of R7 453, an increase of R526 year-on-year, just enough to overtake Eastern Cape's position. '20.8% of tenants were behind on their rent in Q1, falling from 24.2% last quarter. It is still the highest in the country, but by a lot less than before.' Eastern Cape's average rent is R7 330, up by R309 compared to a year earlier, making it the province with the second-lowest rents in the country. 'The share of tenants in arrears in the Eastern Cape rose to 19.3% from 18.7% the previous quarter for the second-highest quarter-to-quarter increase in SA.' Income and risk The Index also focused on which income brackets are the highest risk. Of applicants earning R80 000 or more, a full 60.6% fall into the minimum risk category, while just 12.2% are classed as high risk. 'Meanwhile, in the lowest income bracket, only 23.0% have the combination of a high credit score and a clean payment history needed to qualify as minimum risk, while 37.0% are considered high risk.' When it comes to age, 20- to 29-year-olds are classified as minimum risk because most of them do not yet have a long credit history that would demonstrate low risk; however, they also have more disposable income left over after debt repayments and rent than any other age group. Meanwhile, 61.3% of individuals aged 60 and above were classified as being at minimum risk. NOW READ: More South Africans buying houses for less than R700k. Here's why
IOL News
11-06-2025
- Business
- IOL News
South Africa's rental market sees it's strongest growth since 2017
South Africa's rental market kicks off 2025 with impressive growth Image: Freepik South Africa's residential rental market has entered 2025 on a high note, exhibiting its most robust performance in years, according to the latest findings from the PayProp Rental Index. In the first quarter of 2025, average national rental growth climbed to an impressive 5.6%, marking the strongest quarterly increase since the third quarter of 2017. This surge pushed the average rent to R9,132, with growth reaching its pinnacle in February, when a year-on-year increase of 6% was recorded—the highest monthly growth since August 2017. This remarkable rental growth coincides with a favorable inflation landscape, as CPI inflation dipped from 3.2% in January and February to 2.7% in March. This falling inflation has created a notable gap of 2.8% between rental growth and inflation during February and March, representing the most significant real-terms rental gain witnessed in the current growth cycle. The momentum has been largely attributed to strong tenant demand coupled with provincial growth, allowing landlords to recuperate losses suffered during recent slowdowns. Stable arrears figures offer cautious optimism Unlike previous years, the first quarter of 2025 did not experience a seasonal spike in rental arrears, with the percentage of tenants in arrears decreasing slightly to 17.0%. This figure matches a record low first recorded by PayProp in the last quarter of 2023. André van Rooyen, Head of Sales at PayProp, said after last year's first-quarter arrears spike, this stable start to 2025 is encouraging. However, he added that with rents rising at a brisk pace, he emphasised the importance for rental agents to reassess tenant affordability during lease renewals. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ While inflation has remained subdued so far this year, rising electricity tariffs and escalating fuel costs pose potential challenges, threatening to influence official inflation figures and, consequently, tenant affordability in the months ahead. The PayProp State of the Rental Industry report revealed that approximately 80% of rental agents report tenant movement driven by affordability concerns. Presently, the average rent-to-income ratio stands at a manageable 28.8%—below the recommended maximum of 30%. However, landlords renting higher-end properties may need to adopt cautious pricing strategies, preventing the limitation of their prospective tenant pool. Provincial performance shows varying levels of growth The growth in South Africa's rental market is not uniform across provinces. In Q1, Limpopo emerged as one of the fastest-growing markets, achieving a remarkable rental increase of 10.9%, just shy of its stellar performance in Q4 2024 and bringing its average rent to R8,899. The Free State showed resilience, more than doubling its Q4 2024 growth rate to 7.6%, pushing its average rent to R7,453 and surpassing the Eastern Cape. Conversely, Gauteng experienced a slowdown in rental growth, dipping to 2.9%, its weakest performance in over a year, and raising questions about its ability to maintain the third position for average rent at R9,201. Mpumalanga also faced challenges, recording the lowest rental growth in the nation at just 1.1%, with rents only rising by R91 year on year. Meanwhile, the Western Cape continues to command the highest average rent in South Africa at R11,285, although rental growth has decreased slightly to a robust 9.6%. KwaZulu-Natal maintained a steady but below-average growth rate of 4.5%, sitting just R31 shy of Gauteng's average rent, suggesting a potential shake-up in future rankings. The Northern Cape has finally shown signs of improvement, with rents rising by 3.3% after a slow performance last year. In contrast, the Eastern Cape's modest bounce back to 4.4% was insufficient to maintain its ranking, landing it the second-lowest average rent in the country. As the market progresses into the next quarter, van Rooyen observes a landscape filled with potential but also challenges, asserting, 'While landlords and agents are benefiting from stronger demand and healthier returns, it's critical that we remain focused on tenant affordability and long-term sustainability.' IOL
