SA’s rental market is showing signs of sustained recovery, with rental growth for the quarter climbing to 5.6% — the biggest gain since 5.9% in the third quarter of 2017 and 0.4% above the previous quarter, according to the latest PayProp rental index.
In the first quarter of 2024 the share of tenants in arrears jumped to 18.3% before declining through the year to reach 17.1% in the fourth quarter.
There has been no spike in the first quarter of 2025 “mirroring the good rental growth news”, PayProp said. The percentage of tenants in arrears fell to 17.0% in the first three months, “equalling the lowest level ever recorded in the PayProp Rental Index, set in the fourth quarter of 2023”, it added.
“However, the average arrears percentage owed by tenants in arrears remained unchanged from last quarter at 77.1%. This is still adrift of the record low of 74.0%, but around average for the past three years.
“The start to 2025 has been very strong. All provinces experienced positive rental growth in the first quarter. Last quarter, Mpumalanga’s market looked as though it could turn negative — rental growth fell to just 0.2% after two quarters of decline,” PayProp said.
However, three provinces experienced lower rental growth than in the fourth quarter of last year, and two of those had growth rates that were well above average.
“The average arrears percentage owed by tenants in arrears remained unchanged from the last quarter at 77.1%. This is still adrift of the record low of 74.0%, but around average for the past three years,” according to the rental index.
According to the study high-growth regions such as Limpopo and the Western Cape may see added pressure on tenants as accelerating rental growth combines with rising living costs in the coming months.
While inflation remained low throughout the first quarter, this is likely to change in the coming months. In February, fuel prices rose 82c/l and diesel by more than R1, followed by a 12.74% electricity tariff hike on April 1. Changes to electricity billing structures will also affect all grid users — even those relying on alternative energy sources.
While inflation
remained low
throughout the first
quarter, this is likely
to change in the
coming months.
Rental growth in the Free State rebounded strongly in the first quarter of 2025, surging to 7.6% from 3.5% in the previous quarter — more than doubling and making it the fourth fastest-growing province. In contrast, the Eastern Cape rose to 4.4% but slipped to sixth place as other provinces outpaced its growth.
Tenant arrears in the Eastern Cape rose to 19.3% in the first quarter of 2025, up from 18.7% — the second-highest quarter-on-quarter increase in the country. Still, it remains 1% lower than the same period last year.
Despite rising rents, tenant arrears in the Free State dropped to 20.8% in the first quarter from 24.2% — the lowest in more than five years. While still the highest nationally, the gap is narrowing. However, the average amount owed rose to 96.5%, up from 90.4%
Gauteng’s rental growth slowed to 2.9% in the first quarter, the second lowest nationally. Average rent reached R9,201 — the third-highest — but only slightly ahead of KwaZulu-Natal. Arrears dropped to 15.6%, well below the national average, though tenants in arrears owed a high 86.0% of rent, according to the rental index.
In the first quarter of 2025, the Western Cape had the highest average rent at R11,285, with rental growth slowing to 9.6% but still strong. Tenant arrears were the lowest in SA at 13.7%, with those behind owing just 60.2% of rent.
“Limpopo was SA’s fastest-growing province in residential rents in the fourth quarter of 2024, posting an increase of 11.1% over quarter four 2023. The province was knocked into second place in the growth stakes in the first quarter but nevertheless achieved an impressive 10.9% year-on-year growth,” reads the index.
The average rent in Limpopo reached R8,899, R872 more than a year previously. And after claiming fifth place from Mpumalanga in the fourth quarter of 2024, it has pulled further ahead this quarter.
Mpumalanga’s rental growth remained sluggish in the first quarter of 2025, rising just 1.1% — the lowest countrywide — after barely growing in late 2024. The average rent was R8,460, up just R91 from a year ago.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.