Over a third of tenants are high-risk

The quarterly PayProp Rental Index for Q3 2018 tells us SA rental growth continues to slow, reaching only 3.25% for the quarter. The data also shows 37.2% of all rental tenants are classified as high-risk – which is to be expected considering the pressure placed on consumers due to increasing inflation.

The highest percentage of lowrisk tenants and the lowest percentage of risky tenants (ideal combination) can be found in the North West. In sharp contrast to this, the Northern Cape has the highest percentage of risky tenants and the lowest percentage of minimum-risk tenants – only 1 in 10 tenants are in this category, while nearly six out of 10 Northern Cape tenants are classified as risky.

In Q3 only one province showed an increase in rental growth rate compared to the previous quarter – Mpumalanga; the only province with a definite upward trend. The Free State and KwaZulu-Natal saw good growth rates over the past year, but experienced a decrease in growth from Q2 to Q3. The 5.2% year-on-year growth in the Western Cape in Q3 is the province’s lowest since the PayProp Rental Index was first published in 2012.

Average tenant income grew faster than rent for the first time in a year, at 3.73% over the past 12 months. Economists expect inflation to continue to rise for most of 2019 while economic growth is likely to stay slow, meaning consumers won’t get a break for at least the next year.

Johette Smuts is PayProp’s head of data and analytics