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Rental growth in SA has recovered to pre-pandemic levels, according to payment automation platform PayProp's Annual Market Report for 2022.
The average national rent increased by 3.4% year-on-year from the fourth quarter of 2021 to the fourth quarter of 2022, an increase of R268, and bringing the average rent to R8 175.
Rental growth is now higher than the 3.2% recorded in the first quarter of 2020, just before the pandemic hit in SA.
Johette Smuts, head of data analytics at PayProp, says rental growth has rebounded "impressively" over the last five quarters. In the third quarter of 2021, for example, year-on-year rental growth was just 0.2%. PayProp is one of the largest processors of residential rental transactions in SA.
"We have reached a very positive milestone in that rental growth has now recovered to pre-pandemic levels," she says.
However, Smuts cautions that affordability challenges could curb a continued recovery in rental growth in 2023.
In the fourth quarter of 2022, 28.5% of tenants were regarded as "high risk," an increase of 4% compared to the same period in 2021. In the fourth quarter of 2022, 18.1% of tenants were in arrears.
PayProp estimates that tenants spend an average of 46.6% of their net income on debt repayments and 29.1% on rent.
"Slow economic growth due partly to unreliable electricity supply, and interest rate increases, are just two of the factors stretching tenants financially – the effects of which we'll continue to see throughout the year," she said.
