South Africa is made up of about 16.6 million households, yet there are just 6.7 million houses registered at the Deeds Office. This means that roughly 10 million households (40%) live in either informal or rented housing, says Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa.
This scenario is not unique to South Africa. “Markets across the globe are reflecting growing disparities in numbers between those who rent and those who own.”
Comparing figures from other agencies in the global Re/Max network, he says 32% of Australians are in rented homes. Home ownership in the country has been declining, and renting has been on the increase for many years, says Michael Davoren, managing director of Re/Max Australia and Re/Max New Zealand.
“Around two-thirds of Australians either owned or were buying their home in June this year, according to the Australian Bureau of Statistics (ABS). This is the lowest proportion since the ABS began collating figures.” In New Zealand, home ownership (62%) was said to be at a six-year low in February last year.
“Factors affecting low home ownership have included affordability and the ability to access money, employment, cultural trends and lifestyle choices, and a lack of confidence in a country’s leadership,” Davoren says.
The 2016 Re/Max pan-European consumer survey showed that 61% of Europeans own the home they live in. This number varies per region, with more than 50% of Swiss residents renting their homes, and home ownership rates as high as 93% in Malta. In the American market, it was shown that 64% of US households were rented in 2017.
Meanwhile, of the millions of South African households who rent their homes, those in the Western Cape are still paying the highest rents. At R9 080 a month, the monthly average rent in the province is almost R1 000 more than in KwaZulu-Natal (R8 197) and Gauteng (R8 169), the latest PayProp Rental Index has found.
However, the year-on-year rental growth in the Western Cape is only 3.23%, lower than even the national average of 3.99%. The average national monthly rental is R7 684 as at Q3 2019.
“Monthly rental growth figures – measured year on year – were flat for the first nine months of 2019, following similar performance in 2018,” says Johette Smuts, head of data and analytics at PayProp South Africa.
Figures fluctuated between 3.1% and 4.2% each month, with September recording the highest growth of the year, at 4.2%. “This could signal the beginning of a slow recovery in the rental market.
Because of this year’s slow growth, the average national rent increased only marginally, from R7 544 in January to R7727 in September – a difference of less than R200,” Smuts says.
The national Q3 growth of 3.99% is “far below” the 7.39% recorded at the peak of the growth cycle in early 2017, and is not expected to reach those heights again soon. Ongoing financial pressure on consumers and the surplus of housing in many metros are the reasons behind this.
“Tenants are both willing and able to move rather than accept rent increases.” Examining credit metrix over the past 12 months, PayProp also discovered that women spend more of their money on rent than men.
As at Q3 2019 men still earned 35% more than women but Smuts says women part with a third of their income to pay rent, while men spend only around 28%.
“With the difference in income, however, men still spend more in absolute terms. On average, women pay just over R7 500, while men spend just under R8 500.”
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