Rental growth cools but arrears fall to lowest on record

SOUTH African residential rental growth slowed to 5% year-on-year in the second quarter after a strong start to the year, according to the latest PayProp Rental Index.

- STAFF REPORTER

Average rent increased to R9 218, up R433 from the same quarter last year, and crucially, growth remained well above inflation, keeping landlords in positive territory in real terms. At the same time, the share of tenants in arrears fell to just 16.9% nationally, the lowest level ever recorded in the Index, underscoring the overall resilience of tenant finances in managed rentals.

"Rental growth above inflation and arrears at record lows are strong signals that the market remains healthy," says Andre van Rooyen, head of sales at PayProp. "Even with signs of cooling, landlords and agents can be confident that tenants are still able to meet their commitments."

The question now is where rental growth will go in the third quarter. Average year-on-year rental growth slowed from 5.2% in April to 4.5% in June, the lowest monthly figure recorded since May 2024.

"One of the key drivers of the strong growth we've seen over the past year was landlords and agents making up for low or negative growth during the pandemic," says Van Rooyen.

"Now, after four consecutive quarters of real-terms growth, many may feel less urgency to push rents higher."