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The latest PayProp Rental Index for the second quarter of 2023 shared some good news for landlords in South Africa, as rental prices showed year-on-year growth across all nine provinces.
According to the report, South Africa’s recent trend of positive rental growth continued for a seventh
successive quarter in Q2 2023, accelerating to 4.4% year-on-year.
“This is the fastest we’ve seen since the 5.3% measured in Q4 2017, and it is still trending upwards,” noted the report.
In pure pricing terms, this means the national average rent for the second quarter is R8,375, up 4.4% from R8,032 in Q2 2022.
Quarter-on-quarter, however, growth was just R22 in rand terms, but as the graph shows below, it’s too early to say if rental growth is peaking.
Inflation dropped to 4.7% in July after finishing the last quarter at 7.1% – putting it within the SARB’s target range of 3% to 6% for the first time since April 2022. PayPrp noted falling inflation will ease the pressure on consumers, potentially making it easier to achieve higher rent increases.
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Provincial performance
All nine provinces across South Africa showed positive rental price growth. While the majority fell within the national average of 4.4%, there were also some outliers on both ends of the spectrum.
Free State rental growth was the lowest in the country at just 1%. However, PayProp noted that this marks a return to growth after three negative quarters.
The average Free State rent climbed to R6,391, the second-lowest in South Africa, but local landlords should be glad that things are moving in the right direction.
Interestingly, on the other end of the spectrum, the North West posted the country’s highest rental growth this quarter at 9.3%. Despite average rentals increasing by R507 to R5,985, it still has the cheapest rental properties in South Africa.
Regarding the three economic hubs of South Africa – Gauteng, Kwa-Zulu Natal (KZN), and the Western Cape – they all posted rental price growth within the National average.
Surprisingly, the most expensive province for rentals (the Western Cape) only saw growth of 2.8%. The Western Cape’s average rent reached R9,730 in Q2 from R9,462 a year earlier.
This is only R514 in front of the Northern Cape, which experienced the second-highest growth rate in the country. Average rents in the Northern Cape rose by R590 year-on-year, from R8,626 to R9,216 – taking its average rental price from the cheapest in the country to the second most expensive.
Gauteng’s year-on-year rental growth of 4.5% took the average rent in the province to R8,691 in Q2. That’s a strong increase from Q1 when Gauteng posted the second-slowest rental growth in the country at 3.1%.
On the other hand, KZN recorded a 4.4% growth in the quarter – putting it right on the national average.
However, this is a slowdown compared to the 5% in Q1. KZN remains South Africa’s third most expensive province for renters, with an average monthly rent of R8,817.
The table below shows the average rent in all nine provinces and their respective rental growth rate over the past year.
Province | Average rent price | Y-o-y growth |
---|---|---|
Western Cape | R9 730 | +2.8% |
Northern Cape | R9 216 | +6.8% |
Kwa-Zulu Natal | R8 817 | +4.4% |
Gauteng | R8 691 | +4.5% |
National | R8 375 | +4.4% |
Mpumalanga | R8 281 | +5.2% |
Limpopo | R7 663 | +4.3% |
Eastern Cape | R6 777 | +5.1% |
Free State | R6 391 | +1% |
North West | R5 985 | +9.3% |
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