South Africa’s residential rental market began 2025 with its strongest performance for many years, according to the latest PayProp Rental Index.

National rental growth reached an average of 5.6% in Q1 2025 – the most robust quarterly increase since Q3 2017 – pushing the average rent to R9,132.

Growth peaked in February 2025, with a year-on-year increase of 6%.

This increase came against a backdrop of a favourable inflation environment. Consumer price index (CPI) inflation fell from 3.2% in January and February to 2.7% in March, widening the gap between rental growth and inflation.

The real-terms rental gain – 2.8% in both February and March – was the most substantial margin seen in the current growth cycle.

Notably, Q1 2025 broke from seasonal norms. Unlike previous years, the quarter did not see a spike in rental arrears.

Instead, the percentage of tenants in arrears edged down to 17%, matching the record low first reported by PayProp in Q4 2023.

Performance diverged widely by province. Limpopo remained a standout, recording a 10.9% increase in rents, just shy of its Q4 2024 growth. The province’s average rent climbed to R8 899, further extending its lead over Mpumalanga.

The Free State also staged a strong comeback, more than doubling its Q4 2024 growth rate to reach 7.6%, lifting its average rent to R7,453 and overtaking the Eastern Cape in the rankings.

In contrast, some provinces lagged behind. Gauteng’s growth dropped to 2.9%, its weakest showing in over a year, raising concerns about whether it can retain third place for average rent, now at R9,201.

Mpumalanga avoided outright contraction but posted the lowest growth in the country at 1.1%, after ending 2024 at just 0.2%. Rents in the province rose by a modest R91 year-on-year, continuing its pattern of underperformance.

The Western Cape still commands the highest average rent in South Africa with an average price of R11,285, although rental growth has slipped slightly to 9.6% from Q4 2024’s double-digit pace.

KwaZulu-Natal posted below-average growth of 4.5%, but with an average rent now just R31 behind Gauteng, a potential reshuffling in the national rankings may be on the horizon.

In other regions, Northern Cape rents rose 3.3%, showing early signs of recovery after a slow 2024. The Eastern Cape experienced a slight rebound to 4.4%, but not enough to avoid slipping to the second-lowest average rent in the country.

According to PayProp’s latest State of the Rental Industry report, nearly 80% of rental agents say affordability concerns are prompting tenant relocations.

For now, the average rent-to-income ratio stands at 28.8%, below the commonly advised ceiling of 30%. However, landlords of high-end properties may need to reconsider pricing strategies to maintain tenant interest and avoid narrowing their potential tenant pool.