A British mortgage company has compared rents in South Africa’s biggest cities to local average salaries to find where tenants enjoy the most affordable housing – and how rental affordability has changed since 2018.
Online Mortgage Advisor found that rental prices compared to incomes fell sharply in Cape Town between 2018 and 2022, by almost 15%. But the average one-bedroom apartment rent in the city still accounts for more than half of the average monthly income, leaving it as South Africa’s most expensive location for tenants.
Urban tenants looking to minimise their rent-to-income ratio should head to Pretoria, according to the study, where the average one-bed apartment absorbs less than 23% of the average monthly income. Rents there also fell by 9% compared to incomes between 2018 and 2022.
But unlike those examples, rents haven’t declined in all major metros. In 2018, the average Gqeberha resident could expect to spend just over a quarter of their income on a one-bed apartment – now, it’s just under half.
Johannesburg fell into the middle of the pack: a one-bedroom flat costs just under 28% of the average income, a fall of 6.7% since 2018. However, the study also found that it is the most affordable city in the world (on a cost per square metre basis) for local homebuyers.
The national picture
Nationwide, the outlook for tenants is quite positive. Data from the latest PayProp Rental Index shows that rent-to-income ratios were fairly stable between Q2 2022 and Q2 2023. Tenant incomes also rose strongly across most credit score brackets. With inflation now at a more manageable level and interest rates appearing to have peaked, the financial pressure on tenants should be easing – although August’s rise in inflation shows that the country isn’t out of the woods yet.
Tenants across all credit score brackets spend around 30% of their income on rent, ranging from 31.7% for high-risk tenants (who also have the lowest incomes on average) to 27.6% for minimum-risk tenants (who enjoy significantly higher incomes than those in any other risk bracket).