South Africa's rental market sees strongest growth as average rental stays above R9 100
The Western Cape continued to attract the highest average rent in South Africa at R11 285 despite a slight dip in growth from fourth quarter of 2024's double-digit figures to a robust 9.6%.
Image: Freepik
South Africa's residential rental market has kicked off 2025 with a remarkable performance, showcasing the best results in several years.
According to the latest PayProp Rental Index, average national rental growth reached 5.6% in the first quarter of this year, marking the strongest quarterly increase since the third quarter of 2017 and pushing the average rent to R9 132.
Notably, February saw a staggering year-on-year rental increase of 6%, the highest monthly growth recorded since August 2017, indicating a burgeoning recovery in the sector.
This impressive rise comes alongside a favourable inflation landscape as the Consumer Price Index (CPI) inflation fell from 3.2% in both January and February to a low of 2.7% in March.
The resulting gap between rental growth and inflation is significant—standing at 2.8% in both February and March—denoting the most marked real-terms rental gain witnessed in the current growth cycle.
Landlords are beginning to reclaim losses incurred during previous market slowdowns, spurred by a surge in tenant demand and broad positive growth across provinces.
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In contrast to what has been witnessed in previous years, the first quarter of 2025 did not present the usual seasonal spike in rental arrears. The proportion of tenants reported in arrears actually dipped slightly to 17.0%, matching the record low previously established in the fourth quarter of 2023.
'After last year's first-quarter arrears spike, this stable start to 2025 is encouraging,' said André van Rooyen, head of sales at PayProp.
'That said, with rents rising quickly, it's vital for agents to recheck affordability at lease renewal and make sure tenants can afford escalations.'
Despite inflation figures staying subdued, rising electricity tariffs and fuel prices pose potential threats to the overall affordability of renting as the year progresses.
Even amidst strong overall demand, nearly 80% of rental agents surveyed in PayProp's latest State of the Rental Industry reported highlighted affordability concerns as a primary driver behind tenant relocations.
Currently, the rent-to-income ratio remains manageable at 28.8%, comfortably below the recommended threshold of 30%.
Nonetheless, owners of high-end properties may need to strategically adjust their pricing to avoid narrowing their tenant pool excessively.
The performance across provinces has been mixed, with some regions soaring ahead while others lag behind.
Limpopo continued to shine as one of the fastest-growing markets, recording a stellar 10.9% increase in rents. This surge brought the province's average rent to R8 899, solidifying its position ahead of Mpumalanga and amplifying its influence in the rental landscape.
The Free State made a strong comeback, more than doubling its growth rate from the fourth quarter of 2024 to a brisk 7.6%, with average rents now reaching R7 453, allowing it to surpass the Eastern Cape.
In contrast, Gauteng and Mpumalanga appeared to be facing challenges.
Gauteng's rental growth fell to just 2.9%, the weakest in over a year, raising eyebrows regarding its ability to retain its third-place rank for average rent, which currently stands at R9 201.
Mpumalanga showed slight growth at 1.1%, yet it remained the lowest in the country, with a mere R91 increase year on year.
Meanwhile, the Western Cape continued to attract the highest average rent in South Africa at R11 285 despite a slight dip in growth from fourth quarter of 2024's double-digit figures to a robust 9.6%.
KwaZulu-Natal showcased steady growth at 4.5%, and interestingly, it now sits just R31 behind Gauteng, making it one to watch in upcoming rankings.
Northern Cape has emerged positively, with rents rising 3.3% following a lacklustre 2024, while the Eastern Cape showed a modest bounce back to 4.4%, though still retaining the honour of the country's second-lowest average rent.
As the economy moves into the next quarter, the data revealseda market filled with potential but also considerable challenges.
'As we enter the next quarter, the data signals a market with real momentum – but also real challenges,' said van Rooyen.
'While landlords and agents are benefiting from stronger demand and healthier returns, it's critical that we remain focused on tenant affordability and long-term sustainability.'
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