Cape tops average rental rates

Cape tops average rental rates

Category Expert Insight

According to the latest PayProp Rental Index, year-on-year (YOY) rental growth now stands at 3.7%, still down on the last quarter of 2018 when it rose slightly to 4.1%.

The Seeff Property Group expects the rental sector to continue seeing strong demand throughout the year, driven by the weak economic outlook and pressure on household budgets. With fewer people likely to buy houses as they look to contain costs, or battle to secure mortgage finance, they will have no alternative but to turn to the rental market for accommodation.

The PayProp Rental Index shows that the average rental in South Africa rose to the R7,500-R10,000/month price band in the last quarter of 2018. That said, almost one third of rents processed still fall in the R5,000-R7,500/month range. This, largely confirming the demand for affordable rentals according to Seeff’s agents.

The Western Cape remains the province with the highest average monthly rent at R9,030. One third of all rentals fall into the R5,000-R7,500/month category and a further one third above R10,000. Although the highest percentage in the upper price band in the country, it should be noted that only 11% of all rentals fall above R15,000/month. Here too, despite the Cape’s reputation for being more expensive, rents are under pressure.

In second place, is Gauteng with an average rental of R8,000. That said, almost forty percent of all rents below this in the R5,000-R7,500/month price range with only twenty percent falling above R10,000/month.

KwaZulu-Natal is the third most expensive province with an average rent of R7,975. Only 13.5% of rents fall above R10,000 while 8.5% fall above R15,000/month as top end luxury properties start achieving higher rentals.

Next on the ranking, is the Northern Cape with an average rent of R7,817. Close to two-thirds of all rents though fall below this in the R5,000-R7,500/month price range and only a small percentage fall in the R7,500-R10,000/month range.

The average rent for Mpumalanga stands at R7,298 with over one third in the R5,000-R7,500 range and 36% above R7,500/month.

Limpopo boasts an average rent of R7,117 with a high percentage of rentals in the R5,000-R7,500/month bracket.

The Free State boasts an average rental of R6,054, but over two-thirds of rental properties fall in the R2,500-R7,500 price band.

The Eastern Cape remains affordable with an average rent of R5,694. Over one third (34%) of rents though fall below this in the R2,500-R5,000/month price range, and the province has the highest percentage nationally of rentals below R2,500/month.

The North West, however, remains the most affordable province with an average rent of R5,031/month. Over half of all rents fall below that in the R2,500-R5,000 price range.

Seeff agents expect that while the market will remain active for rentals throughout the year, there are still some areas which report high stock levels, hence rental rates are likely to remain under pressure.

Seeff has partnerships in place to ensure that we offer the best rental market service to our clients, from vetting of tenants to ensuring legally compliant documentation and managing of legal aspects relating to the lease and occupancy to maintenance aspects around managed rentals. This includes the PayProp rental payments and tenant management service.

Visit www.seeff.com for more.

Author: Gina Meintjes