South Africa Leads the World in Housing Affordability, But Rising Rent Prices Put Pressure on Tenants

As homeownership remains a significant milestone for many, South Africa stands out as the most affordable country globally for property ownership. According to international real estate brokers, South Africa’s cost-to-income ratio for housing is the most favorable worldwide, with property prices exceeding the average wage by only 6.22%. But despite this affordability for buyers, renters are facing mounting financial challenges as rental prices continue to climb.

South Africa: The World’s Most Affordable Place to Buy a Home

South Africa’s affordability ranking for homebuyers contrasts sharply with countries like Turkey, where property prices account for 81.45% of average wages. With an average rent hitting a record high of R9,051 in 2024, this has become a growing concern for tenants who already face economic pressures from inflation and rising interest rates.

The PayProp Rental Index highlights that South Africa’s national vacancy rate has dropped from 6.72% to 5.07% between 2024 and 2025, signaling a tighter rental market. As a result, landlords have been able to raise rental prices, particularly in provinces like the Western Cape, which remains the priciest in the country with an average rent of R11,141 in late 2024.

The Rental Price Surge: A Growing Strain on South African Households

The most striking trend in South Africa’s rental market is the growing proportion of income being spent on rent. As of Q4 2024, rent now accounts for an average of 28.7% of household income, up slightly from 28.3% in Q3 2023. More than half of tenants now pay over R7,500 a month, a stark shift from previous years when most tenants were paying between R5,000 and R7,500.

This increase in rental prices comes at a time when South African households are also dealing with growing debt repayment burdens, which have risen from 43.6% to 44.1% of income. Combined with a 17% arrears rate, many tenants are struggling to meet their financial obligations, prompting landlords to raise deposit requirements to hedge against inflation.

Western Cape: South Africa’s Rental Price Leader

The Western Cape continues to hold the title as South Africa’s most expensive province for renters. The average rent in this region is significantly higher than in the rest of the country, and vacancy rates have dropped to an alarming low of just 1.07% in Q3 2024. This tight supply has created intense competition for rental properties, leading to further rent hikes.

As demand continues to outpace supply, experts predict that rents in the Western Cape and other high-demand areas are likely to rise further in the coming year. However, while rent may be high, buying property remains an achievable goal for South Africans in comparison to global markets.

South Africa’s Property Market: Affordable for Buyers, Challenging for Renters

Despite the high rents, South Africa’s status as the most affordable country for buying a home remains intact. As of 2024, the average property price exceeds the average wage by just 6.22%. In comparison, countries like the United States, Denmark, and Bahrain, while offering higher wages, have much higher property prices per square meter.

Nevertheless, affordability does not guarantee that homeownership is within reach for all South Africans. The 2024 TPN Tenant Survey revealed that 58% of South Africans felt financial barriers were preventing them from buying a home, with 48.1% citing affordability issues. Limited access to credit, particularly for first-time buyers, remains a major obstacle for many.

The Future of South African Real Estate

Looking ahead to 2025, South Africa’s property market shows signs of promise, with rental demand remaining strong and real estate investment expected to continue. However, the rising cost of renting is putting a significant strain on tenants, particularly in high-demand areas. For landlords, careful management of rental properties, along with strategic planning, will be crucial in adapting to evolving market trends.

In conclusion, while South Africa remains a global leader in housing affordability for buyers, the rental market continues to evolve, with rising rent prices putting more financial strain on tenants. As the property market continues to adapt, both renters and buyers will need to navigate these challenges with careful financial planning and foresight.