News Research

The State of SA’s Property Market Q4 2022

We live in an uncertain world when considering the current political landscape, the economy, and the direction of interest rates. Add to this toxic brew the collapse of Eskom and it is clear that SA’s property market will be stuck in ‘low gear’ for years to come, according to Rode’s ‘State of the Property Market Q4 2022’ report.


The office market remains challenging due to its significant oversupply, although fundamentals are looking slightly better. Vacancy rates for grades A+, A and B stabilized at approximately 14% in Q4 2022, which is marginally better than Q4 2021. Nominal rental growth is also picking up from a low base.

Nationally, weighted gross market rentals for decentralized grade-A space increased by 3% year-on-year in nominal terms in Q4 2022, after rising by 2% in Q3. This takes rental growth for the full 2022 to 1.1% – a recovery after two dismal years of declining rentals. The average 2022 rental on a national level was still 5.3% below the 2019 level, pre-pandemic. The market has been boosted by the return of workers to offices, albeit in many instances in a hybrid way, with the pandemic now firmly out of many people’s minds. However, there is one caveat: the above rentals are nominal rents, meaning no rental remissions, tenant installation allowances or a number of months rent-free are assumed. In real terms, rentals fell by a hefty 7% after deducting building-cost inflation (BER BCI), which stood at close to 11%.

Regionally, Cape Town decentralized has been the clear best performer with grade-A nominal rentals in Q4 2022 up by 16% compared to Q4 2021. Rentals of grade-A decentralized office space increased by 4.8% in Johannesburg and by 2% in Durban. Pretoria continued to buck the trend, with rentals down 5.3%. It is important to understand that these increases are year-on-year, meaning the Q4 2022 level is compared to the low level of Q4 2021. Rode’s has also noted better rentals in secondary cities, such as Bloemfontein and George. In real terms, only Cape Town managed to record above inflation rental growth.


The industrial property market had a decent 2022, with national nominal rentals for space of 500m2 rising by 5.3%, well up from the 2.2% for 2021. However, the story is not so bright in real terms, after deducting building-cost inflation (BER BCI) of about 11%. Turning to Q4 survey results, rental growth remained stable at about 5.7% compared to Q4 2021. This means the industrial sector is still comfortably the best placed of the major commercial sectors. The market has been boosted by continued low vacancies, especially for warehouses linked to logistics, which stems from the strong online retail sales market as well as the revolution in racking systems, which allow for automated racks of 12 m and higher.

Regionally, Cape Town performed the best in 2022, with nominal industrial rentals for prime space of 500m² rising by 6.3% year-on-year however, growth did cool somewhat to approximately 5% year-on-year in Q4 2022. Cape Town’s vacancy rate remains low at 3.8%. Nominal rentals in the Central Witwatersrand and Durban also performed well in 2022, with growth of 5.4% and 4.6% respectively. Interestingly, rental growth in Central Wits picked up further in Q4 to about 6%, even outpacing Cape Town. In Durban, fundamentals are strong as the July 2021 looting and floods in 2022 have created a shortage of space in some areas. Of interest is the fact that rental growth in the East Rand also lifted to 5% from 3.9% in Q3 after averaging about 1% in 2020 and 2021. Industrial vacancies remain the highest in the West Rand, Gqeberha (PE) and Bloemfontein at between 5% and 10%.


The housing market continues to slow down as expected as the higher cost of living and rising interest rates eat into demand. Nominal prices grew by 3.2% in November 2022 compared to November 2021, based on FNB data. Lightstone’s ultra-smoothed index shows house price growth was even lower at 2.7% in October. Price growth was 3.6% over the first 11 months of 2022, marginally slower than the 4.2% growth for the full 2021 (FNB data). At this stage, the impact of interest rate hikes is only marginal on prices and volumes, as these remain relatively low by historical standards.

In real terms, house prices fell sharply as the consumer inflation (CPI) rate averaged 6.8% over the same period. Turning to apartments, the market experienced a better 2022 compared to 2021, with vacancies declining and nominal rentals picking up slowly. Vacancy rates in South Africa averaged 6.8% in Q4 2022, down from 7.8% in Q3 2022, according to Rode’s residential survey data.

On a regional level, most provinces and cities covered by Rode showed better vacancy rates compared to Q3 2022. The Western Cape continues to stand out with its low vacancy rate of 3.3%, which is way better than the national average. Gauteng also saw a better vacancy rate in Q4, but at 8.2% it is still above the national average. All in all, house prices and rentals are still declining in real terms in most parts of the country.

In case you missed it, read the Q1, Q2 and Q3 reports.