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The best paying tenants live in North West, worst in Northern Cape – PayProp

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Almost 40% (37.2%) of all tenants are classified as high-risk. This is according to the  PayProp Rental Index for Q3 2018, which also indicated that South African rental growth was just 3.25% for the quarter.

PayProp head of data and analytics, Johette Smuts, said the highest percentage of low-risk tenants and the lowest percentage of risky tenants (the ideal combination) can be found in the North West.

“In sharp contrast to this, the Northern Cape has the highest percentage of risky tenants and the lowest percentage of minimum-risk tenants – only 1 in 10 tenants are in this category, while nearly 6 out of 10 Northern Cape tenants are classified as risky.”

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In Q3 only one province showed an increase in rental growth rate compared to the previous quarter, Mpumalanga; it is also the only province with a definite upward trend over the past year. By comparison, the Free State and KwaZulu-Natal both saw good growth rates over the past year, but experienced a decrease in growth from Q2 to Q3.

“It’s worth noting that the 5.2% year-on-year growth recorded in the Western Cape in Q3 is the province’s lowest since we started publishing the PayProp Rental Index in 2012,” said Smuts. “One positive development is that average tenant income grew faster than rent for the first time in a year, at 3.73% over the past 12 months.”

She noted that economists expect inflation to continue to rise for most of 2019 while economic growth is likely to remain slow, meaning consumers won’t get a break for at least the next year.

“Risk management should be the number one priority,” said Smuts. “Don’t compromise on tenant placement, recheck before you renew, and diligently chase arrears.”


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