Rental growth in South Africa has reached a new seven-year high, according to the latest data from the PayProp Rental Index.
After a surprise year-on-year fall to 3.8% in Q1 2024, rents rose by 4.9% in Q2 – the fastest growth recorded since 2017. The average rent in South Africa reached R8 785, R410 more than a year earlier.
At the end of the quarter in June, year-on-year rental growth hit 5.2%, marking the first time in almost five years that rental growth outpaced inflation (measured at 5.1% in the same month). Inflation has since fallen to 4.6% in July 2024, improving the prospect of further real-terms growth in Q3.
Surprise provincial growth patterns
All provinces experienced positive rental growth in Q2 2024, including KwaZulu-Natal, where rents declined in Q1 but grew 1.5% in Q2. The three provinces with the lowest growth in Q1 (KZN, the Northern Cape and Mpumalanga) all did better in Q2.
Meanwhile, Q1’s top performers experienced weaker growth in Q2. In the Free State, growth fell from 9.1% to 5.8%, while it went from 9.8% to 6.3% in the North West. Both of these figures were still above average, but that hasn’t stopped these two provinces from being South Africa’s least expensive regions to rent in.
The surprise standout performer in Q2 was the Western Cape. The Western Cape traditionally hasSouth Africa’s highest rents, but (perhaps understandably) has consistently recorded average or below-average rental growth in recent years. In Q2, however, rental growth shot up to 9.7%, comfortably the highest of any province. The average rent now stands at R10 673, more than R1 450 ahead of the next most expensive province.
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