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- Residential rental growth had the strongest performance since the start of the Covid-19 pandemic, according to the latest analysis from payment automation platform PayProp.
- But inflation could have a dampening effect.
- The Western Cape remains the most expensive province for tenants - at over R1 400 more per month than the national average.
Residential rentals showed the strongest growth since the start of the Covid-19 pandemic in the first quarter of this year, according to the latest analysis from payment automation platform PayProp.
The average national rent was 1.8% higher at R7 958 in the first quarter of 2022 compared to the first quarter of 2021. It was also the first time rental growth exceeded 1% since the third quarter of 2020. Year-on-year rental growth was below 1% in all four quarters of 2021.
"After last year's holding pattern, rental growth rebounded in the first quarter of 2022, with y-o-y growth of 1.5%, 1.1% and 3% recorded in January, February and March respectively," says Johette Smuts, head of data analytics at PayProp.
She warns that, although the Rental Index shows positive signs, there is a potential dampening impact of increasing inflation, driven by higher prices of oil and other commodities since the start of the Russian invasion of Ukraine in February.
"We're seeing central banks worldwide respond by increasing interest rates to curb inflation, which will dampen economic growth and could then affect tenants' incomes and job security, placing downward pressure on rental growth rates," explains Smuts.
"The higher rental growth seen in the first quarter is reassuring, but higher interest rates and inflation will put downward pressure on rental growth going forward. Tenant affordability will remain an issue, and a slowdown in the global economy could further impact their finances."
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Provincial picture
There was positive rental growth in all provinces except in Gauteng. The average rent in Gauteng decreased by 0.1% y-o-y to R8 379 in the first quarter.
For the second quarter in a row, Mpumalanga recorded the highest rental growth rate, namely 5.3% to an average rent of R7 866. Limpopo came in second with average rent increasing by 4.6% in the first quarter to an average rental of R7 189 per month. Rents in KwaZulu-Natal increased by 2.5% for the first quarter to R8 381 - the third-highest in the country.
The Western Cape remained the most expensive province for tenants with the average rent increasing from R9 142 in the first quarter of 2021 to R9 399 in the first quarter of this year - R1 441 over the national average.
In the first quarter 18.4% of tenants were in arrears on a national level, the same as in the fourth quarter of 2021. Smuts is especially concerned about the situation in the North West where the percentage of tenants in arrears increased from 18.2% in the fourth quarter of 2021 to 25.5% in the first quarter of this year.
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