PayProp Rental Index: Limpopo and Western Cape lead rental growth in Q4 2024

South Africa’s rental market continued its upward trajectory in Q4 2024, with the average rent surpassing R9 000 for the first time. The latest PayProp Rental Index shows national rental growth of 5.2% year-on-year, signalling a more confident market despite economic uncertainties.

The average national rent now sits at R9 051, reflecting an increase of R453 over the same period last year – the highest rental growth rate since 2017. Provincially, Limpopo recorded the strongest rental growth at 11.1%, followed closely by the Western Cape at 10.1%. Meanwhile, Mpumalanga struggled with minimal rental growth of just 0.2%, raising concerns about a possible decline in that province in early 2025.

Tenant affordability holds steady despite rising rents

Tenant affordability remains a critical factor in South Africa, with tenants spending 28.7% of their income on rent and 44.1% on debt repayments. Both of these percentages were higher than a year before but trended down in Q4. Despite rental growth outpacing inflation, national tenant arrears remained near record lows – only 17.1% of tenants were behind on rent in the last quarter.

This shows that while rental prices are rising, most tenants are managing to keep up with payments, begging the all-important question: Might stronger growth be on the cards again?

André van Rooyen, head of sales at PayProp says the data shows landlords and agents are regaining confidence, which could lead to more significant rental increases while tenant affordability remains healthy. “The gap between rental growth and inflation widened throughout Q4, providing landlords with better real-terms returns,” says van Rooyen.

Economic uncertainty, however, continues to play a role in the rental landscape. While further interest rate cuts are expected to improve affordability even more, other factors such as rising electricity costs and potential global trade tensions could influence market conditions in 2025.

Rise in older tenants good news for landlords

South Africa’s rental market is seeing a demographic shift, with older tenants making up a growing share of renters. PayProp data shows that tenants aged 60 and older now account for 6.8% of the market, up from 5.8% two years ago. This shift 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.

Download the full PayProp Rental Index here: https://za.payprop.com/rental-index

The PayProp Rental Index is a quarterly guide outlining trends in the South African residential rental market and is compiled from transactional data collected by PayProp, the largest processor of residential rental transactions in South Africa. www.payprop.co.za