The Northern Cape has experienced another quarter of rapid residential rental growth and could take on the Western Cape as SA’s most expensive province to rent in, according to the PayProp Rental Index for Q1 2023 which shows, that for four consecutive quarters, the Northern Cape has boasted the fastest growth.
During Q1, the province reached an average rent of R9 248, up from R8 962 in Q4 2022. Year-on-year, rentals increased by an impressive 10.2%.
For now, the Western Cape still boasts the highest average rent in SA at R9 872, up from R9 737 in the previous quarter. Year-on-year, rentals in the province grew by an above average of 5%.
“If above-average growth continues in the Western Cape, rents could well reach five figures during the course of the year. Despite that, if the Northern Cape continues to grow at the pace it has for the last four quarters, the Western Cape might soon be challenged for the top spot,” comments Johette Smuts, Head of Data and Analytics at PayProp.
From a national outlook perspective, PayProp reported national rental growth of 3.9%, 4.6% and 4% in January, February, and March respectively. However, inflation remained high at 6.9%, 7% and 7.1% in the same months. Smuts says to date, interest rate increases have done little to tame inflation, which is now below last year’s peak but still stubbornly high.
“Rising prices and more expensive debt repayments are putting continued pressure on tenants’ ability to afford rent,” says Smuts. “On the other hand, tenants who have managed to control their expenses are continuing to rent as rising interest rates price them out of buying homes, increasing demand for rental properties.”
Despite persistently high inflation, the rental market appears to be recovering well and rental growth is now comfortably into the range seen before the pandemic.
The average national rent rose by 4.2% from Q1 2022 to Q1 2023, the strongest year-on-year figure since Q4 2017. In monetary terms, this was an increase of R336 to R8 924 since Q1 2022. National rental growth has now accelerated for six successive quarters. To date, rents have also resisted downward pressure from high inflation and diminished affordability to set a clear upward trend.