PayProp Rental Index: Rental growth slows in Q2

Rental growth fell to 5.0% in Q2 2025, breaking a three-quarter hot streak for the rental market.

Data from the latest PayProp Rental Index shows that year-on-year growth was 5.2% in April and 5.4% in May, but dropped to 4.5% in June, the lowest recorded in over a year. However, low inflation meant that real-terms returns held up. Inflation remained at or below 3.0% throughout the quarter.

The drop was caused by slow growth in SA’s three biggest rental markets. In Gauteng, rents grew 2.4% year on year, while KwaZulu-Natal posted growth of 3.6%. By comparison, the rate of increase in the Western Cape was much stronger at 7.3%, but just two quarters ago the province was putting up double digit growth.

Meanwhile, growth accelerated in most of the smaller provinces, including the Northern Cape, Eastern Cape and Free State. Limpopo led the rental growth leaderboard for the second time in three quarters with an astounding 12.5%, raising the possibility it could break into the top three this year.  

The average rent in SA during the quarter was R9 218, R433 more than a year earlier.

Consumer effects

Four quarters of above-inflation rental growth could be expected to push more tenants into arrears, but that hasn’t happened. The percentage of tenants in arrears fell to 16.9%, the lowest ever recorded in the PayProp Rental Index. Tenants in arrears also owe a record low average of 73.7% of monthly rent.

Moreover, the share of income that tenants spend on rent has fallen since a year ago. In Q2 2024, tenants spent an average of 30.3% of their income on housing. In Q2 2025, it was 29.9%.

Meanwhile, spending on debt is up, with the average rental applicant now spending over half their income (52.1%) on repayments compared to 46.7% a year earlier. Underlying that figure, however, is a large and growing gap between the riskiest and safest applicants. Even though the average applicant is getting more indebted, minimum-risk and low-risk tenants now spend less of their income on debt and rent than they did a year ago. All considered, rental agents will have to screen applicants carefully to ensure that they are placing financially stable tenants.

The PayProp Rental Index for Q2 2025 contains more in-depth data on rental growth, arrears, affordability and more. We also bring you an insightful interview with experienced agency owner Mirinda Opperman, as well as advice on using your agency’s data more profitably. To download your copy, click below.