If you are still renting a property in South Africa then there is some bad news for you on the horizon.
IF YOU are still renting a property in South Africa then there is some bad news for you on the horizon.
According to new research, SA’s rental growth is continuing its upwards trend since April last year.
It should be noted that this information is according to PayProp’s latest rental index for the second quarter of 2022.
In Q2 2022, all nine provinces recorded positive year-on-year rental growth. The last time this happened was almost five years ago, in Q3 2017.
PayProp’s research looked at provincial rental growth since the beginning of 2020, just before the start of the pandemic.
While all provinces’ rental growth rates were in some way affected by Covid-19, the researchers knew from experience that various other factors also influence house prices, and therefore rental growth rates in the provinces.
These factors include housing shortages, development, short-term rental listings and overall economic performance.
Here is a look the rental growth in each province:
EASTERN CAPE
Rental growth in the Eastern Cape has outperformed the national average in all but one of the last 10 quarters.
The moving average trendline shows that the downward trend from the end of 2020 ended in Q3 2021, with rental growth picking up again over the three most recent quarters.
In Q2 2022, rental growth in the Eastern Cape was 4.4%. Rents increased to R6,451, up from R6,365 the same quarter a year ago. During this most recent quarter, the province was the third cheapest to rent in.
FREE STATE
In the Free State, rental growth has rebounded over the last four quarters but overall performance is still weak. The province experienced negative rental growth throughout 2021, and while the 1.9% of Q2 2022 was the region’s fastest since Q3 2020, it was still the second lowest in the country.
Average rent during the most recent quarter hit R6,328, also the second lowest out of all provinces.
GAUTENG
Gauteng, too, experienced four consecutive quarters of negative rental growth recently.
In Q2 2022, however, the province may have started to recover – its most recent recorded rental growth of 0.3% is the first positive change since Q1 2021, but is also the lowest out of all nine provinces.
Encouragingly, the moving average trendline indicates a positive trend over the last two quarters. Average rent increased to R8,319, up from R8,292 in the same quarter last year – comfortably above the national average.
KWAZULU-NATAL
During the first four quarters after lockdown was announced, KwaZulu-Natal experienced negative YoY rental growth.
However, the province has now been outperforming the national average for five consecutive quarters since Q2 2021. KZN has seen escalating growth over the last four quarters and recorded 3.0% YoY growth during Q2 2022, above the national figure of 2.6%.
Average rents have increased to R8,443 from R8,200 since Q2 2021, and KwaZulu-Natal is currently the third most expensive province.
LIMPOPO
Limpopo’s winning streak continues, with year-on-year rental growth of 4.7% recorded in Q2 2022. It’s a stunning turnaround for a province that recorded 14 consecutive quarters of negative rental growth up to Q1 2021. Since then, Limpopo’s rental growth has outperformed the national average every quarter since Q2 2021 – although the trend line shows that it may now be levelling off.
The province experienced the third highest rental growth of any province this quarter, with average rent increasing from R7,017 in Q2 2021 to R7,350 in Q2 2022.
MPUMALANGA
Mpumalanga has been another star of recent times, recording rental growth above 3% in the last four quarters and outperforming the national average by far.
The moving average trendline indicates steep upward growth over the last year. During the most recent quarter, the province notched up growth of 5.2%, the second highest rate in the country.
Average rents rose to R7,870 in Q2 2022, up from R7,484 over the corresponding period the year before. Continued strong performance could see it overtake the national average, currently at R7,971, by the end of next year.
NORTH WEST
In the North West province, average rents increased by 3.9% during Q2 2022. This was substantially higher than the national average of 2.6%, and an improvement from the 2.0% seen the preceding quarter. Growth rates in this province have outperformed the national average for the last six quarters, after relatively small falls in 2021.
In Q2 2022, North West was still the cheapest option for tenants, with average rents increasing to R5,478 from R5,274 in Q2 2021 – a difference of R204.
NORTHERN CAPE
In the Northern Cape, the average rent increased by 9% year on year in Q2 2022, by far the highest out of all nine provinces. This figure finished at R8,626 – up a whopping R715 from the R7,910 recorded in Q2 2021, causing the Northern Cape to retain its spot as the second most expensive province in which to rent.
Rental growth in this province has been volatile over the past two years, and this can be seen in the moving average trendline as well.
WESTERN CAPE
To look at the Western Cape’s performance now, you wouldn’t know that it experienced four consecutive quarters of negative year-on-year rental growth from Q2 2020 to Q1 2021.
In the most recent quarter, the province recorded rental growth of 3.0%, above the national average of 2.6%, and it has outperformed the national average for the last five quarters.
To top it all off, the Western Cape remains the most expensive province for tenants in South Africa. The average rent in Q2 2022 was R9,462, up from R9,185 in the same quarter the year before.
– BUSINESS REPORT
