In Q2, just after it was announced that the South African economy had entered a recession, PayProp speculated that continued economic contraction could cause the gap between rental growth and inflation to widen.
Luckily, the recessionary woes were short-lived and, as noted above, year-on-year growth for Q2 came in at 1.1%. Unfortunately, this doesn’t mean consumers will have it any easier – disposable income levels are expected to stay under pressure due to low job creation and possible tax increases in the near future.
Following the rent-inflation graph into Q3, PayProp sees a significant drop in rental growth and an increase in inflation in September, the last month of the quarter. As a result, a closing of the gap is evident as rental growth returns to levels closer to inflation growth (last seen in November 2016).
Read more here: PayProp Rental Index Q3 2017