Landlords Bounce Back as SA Rents Hit 8-Year High and Arrears Drop

Tenant behaviour improves while rental prices surge, painting a sunnier picture for the property sector

South African landlords are finally breathing a sigh of relief. After years of uncertainty, stalling prices, and pandemic-era rent freezes, 2025 has ushered in a promising upswing—rents have soared to their highest level in nearly a decade.

According to the latest PayProp Rental Index, average rental growth reached 5.6% in Q1, the strongest performance since 2017. The rebound is nationwide, and even provinces that had been flirting with negative growth, like Mpumalanga have turned the tide.

From Survival to Stability

Just a few years ago, landlords were waiving rent, battling ballooning arrears, and hoping tenants could hang on through COVID-induced financial shocks. Now, things are shifting.

“Landlords are finally recovering from the pain of low or even negative rental returns during the pandemic,” notes PayProp, adding that the return of real-terms rental growth, thanks to low inflation, has helped balance the scales.

With the Consumer Price Index dipping to just 2.7% in March, rental price growth is now significantly outpacing inflation—great for property investors, but a sign of growing affordability pressure on tenants.

Are Renters Coping with the Climb?

It seems they are—at least for now.

Encouragingly, tenant payment behaviour has held steady despite the rising cost of renting. The number of tenants in arrears fell to 17%, matching the lowest figure ever recorded by PayProp. That’s a big improvement from the post-pandemic peak of over 25%.

In terms of how much tenants owe when they fall behind, the average has also shrunk. In 2020, it was more than a month’s rent. In 2025? Just 77.1%.

Province by Province: Who’s Struggling, Who’s Soaring

• Western Cape continues to lead in payment discipline. Just 13.7% of tenants were behind on rent in Q1, and the average arrears were the lowest in the country at 60.2% of monthly rent.

• KwaZulu-Natal remains a concern but has improved. At 19.4%, it’s the third-highest arrears rate, though still the province’s best in five years.

• Gauteng, South Africa’s rental hub, is showing a mixed bag. Arrears rates have dropped to 20.8%, down from 24.2%, but the tenants who are behind owe more than anywhere else—96.5% of a month’s rent.

• Eastern Cape is sending warning signals. Arrears climbed to 19.3%, and the average amount owed rose too, suggesting early signs of pressure on tenant finances.

• Northern Cape and Limpopo remain relatively stable, with arrears rates well below the national average.

Who’s Renting, and Can They Afford It?

PayProp also looked at tenant risk profiles, and landlords may find the numbers comforting. Nearly 40% of applicants fell into the minimum risk category, while only 26% were labelled high-risk. This ratio has improved slightly from a year ago.

That shift hints at a healthier, more financially stable tenant pool—a vital ingredient for any sustained rental recovery.

What’s Fueling This Rebound?

A mix of low inflation, modest interest rate cuts, and strong tenant demand is driving the momentum. The Reserve Bank, which has been cautiously cutting rates, made another move in May. Lower borrowing costs boost both property sales and rental affordability, stimulating the market on both ends.

Still, experts warn of external risks. Global trade tensions, economic slowdowns, and a fragile local economy could cool the market down later this year.

The Bigger Picture: A Market in Motion

Rental growth in 2025 isn’t just a numbers game—it’s a symbol of resilience.

After a bruising period marked by pandemic uncertainty, market freezes, and soaring arrears, landlords and rental agents are finally seeing signs of life and confidence. The rental market, long the underdog in the post-COVID property narrative, may now be leading the comeback story.

The question now is whether this growth can be sustained—or if economic headwinds will bring the good times to a premature end.

For now, South African landlords can enjoy something they haven’t had in years: relief and recovery.

{Source: BusinessTech}

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