Rental Property Market Overview in 2023. Average Rent in South Africa

Rental Property Market Overview in 2023. Average Rent in South Africa. PayProp’s annual market report for 2023 reveals how much average South Africans are paying on rent across the country’s nine provinces. The report details the national sentiment placing inflation as the most significant risk to the rental market.

South Africa Rental Property Market Overview: Average Rent and Income Levels in Nine Provinces

PayProp, a property management company, has released its annual market report for the year 2023, detailing the average rental prices in the nine provinces of South Africa. The report also highlights how increasing interest rates and high commodity inflation are putting pressure on both tenants and landlords.

National Picture

According to PayProp, net monthly income increased by R1,476 to R36,288, representing a year-on-year (YoY) increase of 4.2%. While this increase is welcome, it has not kept up with inflation, which is putting more pressure on tenants’ finances. Tenants in South Africa are spending an average of 29.1% of their income on rent. When debt repayments of 46.6% are included, this leaves tenants with only 24.3% of their income to spend on necessities such as food, school fees, and entertainment.

Rental Property Market Overview in 2023. Average Rent in South Africa

The report reveals that 28.5% of tenants were labelled as presenting a high credit risk during Q4 2022. This is an increase of 4% compared to the corresponding period. Moreover, 18% of tenants had a major delinquency against their name, compared to 16.8% in the same quarter the previous year, while the average credit score worsened slightly from 646 in Q4 2021 to 641 in Q4 2022. These are clear signs that tenants are struggling to keep up with the rising cost of living and the increasing cost of servicing debt.

Province-by-Province Overview

Western Cape

In the Western Cape, YoY rental growth remained modest throughout the year, ranging from 2.8% in Q1 to 3.4% in Q4, which was in line with the national average in Q4 2022. The Western Cape remains the most expensive province in which to rent, with the average rent increasing by R323 YoY to R9,737 in Q4 2022.

Tenants in the Western Cape enjoyed the highest income levels observed nationally in Q4 2022. The average income in the province was R43,263, increasing 8.9% from Q4 2021. After spending 29.4% on rent, tenants were left with 32.6% of their take-home pay to cover their monthly expenses, which is the highest share of income left after debt and rent payments in the country.

Rental Property Market Overview in 2023. Average Rent in South Africa

KwaZulu-Natal

KwaZulu-Natal’s rental growth rate followed an upward trajectory during the first three quarters of the year before dipping to 2.9% YoY in Q4 2022, which was below the national average of 3.4%. Rent increased by R246 to R8,632 over the same period, which was the third-highest out of the nine provinces.

The average net income for KwaZulu-Natal tenants in Q4 was R35,903, up 3% from the same quarter the previous year. However, this lagged the national growth rate of 4.2% and income of R36,288. After paying rent, tenants had a disposable income of 24% of their take-home pay to cover monthly expenses, more than the 21.8% they had available the previous year.

Rental Property Market Overview in 2023. Average Rent in South Africa

Northern Cape

The Northern Cape had the highest YoY rental growth out of all the provinces in Q4, at 8.1%. The area returned strong rental growth figures last year, leading the pack in the first three quarters. The average rent measured at R8,962 in the last quarter, up R675 from R8,287 in Q4 2021.

PayProp’s latest annual market report for 2022 detailing how much average South Africans are paying on rent across the country’s nine provinces,