Tenants hunt cheaper homes as rent increases slow

Rental growth in South Africa remained above inflation in the final quarter of 2025, but the pace of increases is slowing.

That’s according to the latest PayProp index, which highlights mounting pressure on both tenants and landlords.

After a year of strong rental increases, growth has begun to taper off, with affordability emerging as a key constraint.

Related articles on South Africa’s deepening rental squeeze:

--Rent is rising faster than relief: Why more tenants are at breaking point

--Tension between landlords and tenants is rising in SA

--Rent arrears rise as SA households turn to credit to afford everyday essentials

Consumers are increasingly under financial strain.

Disposable income is tightening as debt-to-income ratios rise, not because households are taking on more debt, but because many are struggling to meet existing monthly commitments.

This is pushing renters to make tough choices.

Tenants looking for more affordable properties is now the main reason people are moving, according to PayProp.

The rent-to-income ratio has remained around 30%, but reduced disposable income means renters have less room to absorb increases.

Landlords face slower real growth

For landlords, the slowdown is significant.

Higher inflation is eroding real rental growth, even as nominal rents continue to rise.

At the same time, affordability constraints are limiting how much landlords can increase rents without risking vacancies or non-payment.

Provincial trends show a mixed picture

The Western Cape remains the best-performing province.

Strong demand, driven by semigration and lower unemployment, continues to support rental growth.

However, rising property prices are pushing up costs such as municipal rates, feeding into higher rents.

Despite this, tenants in the province are the most reliable, with the lowest levels of arrears.

Gauteng has the largest tenant base, with nearly half of the country’s renters located in the province.

This creates a deep pool for landlords, but arrears remain a concern, with a notable share of tenants falling behind on payments.

KwaZulu-Natal broadly mirrors Gauteng but with slightly weaker performance.

Arrears are rising, while rental escalations remain relatively low.

The province is seeing both inward and outward migration, contributing to a more stable but less dynamic rental market.

The Eastern Cape is performing well, while regions like the Northern Cape and North West are seeing strong rental escalations, partly linked to mining activity.

By contrast, provinces such as the Free State and Mpumalanga are still under pressure, although Mpumalanga has returned to modest growth.

Short-term rentals not a major driver

Despite concerns, short-term letting platforms are not significantly distorting the long-term rental market.

Investors entering the short-term space are typically targeting different types of properties, rather than shifting stock away from long-term rentals.

Rental growth, the index suggests, remains driven by long-term supply and demand dynamics.

Outlook: pressure on both sides

The overall picture is one of tension.

Tenants are under increasing financial pressure and actively seeking cheaper options.

Landlords, meanwhile, face slowing real returns and growing concerns about tenants’ ability to pay.

Affordability is now the central force shaping South Africa’s rental market.

For more information, listen to Michelle Dickens from PayProp South Africa on 702/CapeTalk’s Early Breakfast with Africa Melane using the audio player below: