The cheapest province in South Africa to rent a house

North West is the cheapest province in South Africa to rent a property, while the Western Cape is the most expensive.

This was revealed in the PayProp Rental Index for the second quarter of 2024, which showed that all provinces experienced growth in rental prices year-on-year.

In the Q1 Rental Index, PayProp reported that rental growth had fallen for three consecutive months and forecast that South Africa’s post-Covid rental recovery was over.

However, shortly after this prediction, the rental property market rallied. Year-on-year rental growth bounced back to 4.9% in April from 3.6% in March. Followed by a small dip in May, it then climbed to 5.2% in June. 

“That’s not only a new post-pandemic high, it’s also the fastest monthly rental growth measured in the Rental Index since December 2017,” the report said. “Plus, it’s been driven by growth in some surprising provinces.”

June 2024 was also the first time that rental growth has outpaced inflation since September 2019, which will be exceedingly welcome news for landlords and agents.

South Africa’s inflation fell to 5.1% in June and has been trending downwards in South Africa and worldwide. The latest inflation print saw CPI hit a three-year low of 4.6% in July.

“Economists are hopeful that on-target inflation figures mean that interest rate cuts can start as early as September, although it remains to be seen whether the South African Reserve Bank (SARB) will agree,” PayProp said. 

The SARB has repeatedly said that it will only consider cutting rates if South Africa’s inflation comes down sustainably and is anchored around the midpoint of its target range, 4.5%.

Therefore, the CPi figure of 4.6% for July has sparked hope for many that the SARB will cut rates at its next Monetary Policy Committee meeting in September.

PayProp said rate cuts would lower bond payments and potentially draw more first-time homebuyers back to the market, reducing demand for rental properties.

“The same resilience that served rental agencies well during the pandemic will help them through today’s challenges,” the report said.

The report looked at rental price growth across the country and found that higher year-on-year rental growth in April, May and June took rental growth in Q2 to 4.9%, up from 3.8% in the previous quarter. This was the highest since Q4 2017.

At the end of the quarter, the average national rent in South Africa stood at R8,785. This is R410 more than in Q2 2023.

In addition, while KwaZulu-Natal experienced a negative growth blip in Q1 2024, the second quarter of this year saw all provinces once again have positive rental growth.

The rental price growth for all provinces can be seen in the graph below, courtesy of PayProp.

The Western Cape is the clear leader in terms of rental price growth. PayProp said this province has had the highest rents in South Africa since 2016, and in Q2 2024, the average rent stood at R10,673. 

This puts it more than R1,450 ahead of the runner-up – a gap that has widened significantly since Q1 thanks to the Northern Cape’s slow growth this year.

However, the report said that, in recent years, the province has also experienced average or below-average rental growth. 

Against this background, the province’s Q2 growth rate of 9.7% comes as a real surprise. 

“In fact, year-on-year growth now appears to be accelerating, reaching 11.7% in June – the fastest recorded in the Western Cape since December 2017,” the report said. The average rent is now almost R1,000 more than in Q2 2023.

The cheapest province to rent a house, the North West, saw its prices grow by 6.3%.

Interestingly, the North West was the fastest-growing province in the last two quarters, with rents increasing by around 10%. 

However, in the second quarter of this year, this figure has fallen to 6.3%. The report explained that while this is still very respectable, it’s only enough for second place.

The falloff in rental growth also cements the North West’s position as the province with the lowest rents in South Africa. 

The average rent there is currently R6,362, up from R5,985 a year before, and R403 below the Free State.

South Africa’s economic powerhouse, Gauteng, recorded a third consecutive quarter of below-average rental growth, but the 3.8% measured in Q2 2024 was an improvement on the previous two quarters.

Last quarter, PayProp predicted that the average rent in the province would soon pass R9,000, and it has now done just that, reaching R9,018 in Q2 from R8,691 a year prior. 

The report said Gauteng is also strengthening its position as the province with South Africa’s third highest rents. 

Rental growth was once again higher than in KwaZulu-Natal, which Gauteng overtook more than a year ago, and the gap to the second-placed Northern Cape is closing. 

The report explained that, at first glance, the KwaZulu-Natal residential rental market performed poorly in Q2 2024, with only 1.5% in rental growth, the lowest of any province. Rents grew by just R128 year on year, reaching R8,945. 

“KZN has been one of the net losers from South Africa’s semigration trend, reducing demand for rental homes,” the report explained.

However, in Q1, KZN rents decreased by 0.4%. Therefore, its 1,5% growth in Q2 makes it the second-best quarter-to-quarter swing in the country. 

This quarter’s low growth is still higher than in either of the previous two quarters. And quarter to quarter, average rents grew by R175. 

“Don’t celebrate yet, but this could be the start of a recovery,” PayProp said.