Tenants take strain as rents keep rising

QUARTERLY year-on-year rental growth continues to climb in South Africa, with the average rent increasing by 2.6% in the second quarter of this year.

The PayProp Rental Index reveals that the average rent increased by R193, reaching R7 971 in Q2 – this is a jump from R7 778 in the same quarter last year, says PayProp’s Johette Smuts.

The moving average trendline, which tracks a rolling three-month average, shows a clear upward trend, which is “good news” for landlords and agents.

The news is, however, not good for tenants as consumers continue to battle rising living costs.

For the first time since Q3 2017, the second quarter of this year saw all nine provinces record positive yearon-year rental growth.

Average rents by province:

1. Western Cape – R9 462

2. Northern Cape – R8 626

3. KwaZulu-Natal – R8 443

4. Gauteng – R8 319

5. Mpumalanga – R7 870

6. Limpopo – R7 350

7. Eastern Cape – R6 451

8. Free State – R6 328

9. North West – R5 478

Tenant payment performance On the topic of tenant payment risk, Smuts cautions that high levels of inflation and increasing interest rates continue to put pressure on tenants’ strained financials.

“The continued financial demands faced by consumers could force those in the rental market to seek out cheaper accommodation options, which would prevent a complete rental market recovery.

“On the other hand, higher interest rates and a reduced ability to save may mean that some higher-income tenants decide to keep renting instead of buying , which will have the opposite effect.”

Although the country has seen continued recovery of the rental market in the second quarter, agents and landlords should continue to remain mindful of the negative effects on a tenant’s ability to pay their rent.