Limpopo recorded the strongest rental growth of 11.1% in Q4 2024 according to PayProp’s latest Rental Index, followed closely by the Western Cape at 10.1%. Meanwhile, Mpumalanga struggled with minimal rental growth of only 0.2%.
The average rent surpassed R9 000 for the first time, currently sitting at R9 051, and highlighting national rental growth of 5.2% year-on-year with rentals during the quarter R453 higher than a year prior and R195 above Q3 2024.
However, tenant affordability remains a critical factor with tenants spending 28.7% of their income on rent and 44.1% on debt repayments – both percentages higher than a year before but trending down during Q4 2024. Despite rental growth outpacing inflation, national tenant arrears remained near record lows with only 17.1% behind on rent in the last quarter, indicating that while rental prices are rising, most tenants are managing to keep up with payments which begs the question: Might stronger growth be on the cards – again?
“The gap between rental growth and inflation widened throughout Q4 2024, providing landlords with better real-terms returns,” comments André van Rooyen, head of sales at PayProp.
South Africa’s rental market is also seeing a demographic shift with older tenants making up a growing share of renters. PayProp’s data shows that tenants aged 60 and older now account for 6.8% of the market, up from 5.8% two years ago which suggests that more retirees are choosing to rent rather than buy.
Older people are also statistically the lowest risk tenant group, with two-thirds falling into the minimum risk category based on their rental payment histories. Their steady incomes and lower debt burdens make them more reliable tenants, which could influence future investment decisions in the rental sector.
“South Africa’s rental market has emerged from a post-pandemic slump stronger than ever. With rents breaking new barriers and tenant affordability stabilising, we anticipate further real-term rental growth in the coming year,” says van Rooyen.
