Northern Cape rentals rocket 'thanks to SKA effect'

Average rentals in the sparsely populated province grew by 87% between 2010 and 2017‚ reaching R7‚119 a month‚ the South African Institute of Race Relations said on Tuesday in its 2018 South Africa Survey.

Analyst Kerwin Lebone said the rise was “phenomenal” because the proportion of households in the province that rent accommodation is the lowest in the country‚ at 1.4%.

The most plausible explanation was linked to construction of the Square Kilometre Array (SKA) in the province – a collaborative international project that began in 2014 and is due to run until 2030. Experts from 10 countries and more than 100 organisations are engaged in the project.

Lebone said this may have enabled residents to increase rental prices to above-market rates for international tenants.

“This underscores the importance of external capital injection into local‚ depressed economies‚” he said.

The Western Cape had the highest rental rates in 2017‚ with the Northern Cape second and Gauteng third. The national average price was R6‚377 a month.

Lebone said the Western Cape’s high rentals could be explained by the province’s relatively successful economic performance and‚ as a result‚ its high rate of in-migration. In addition‚ it had earned a global reputation as a premium tourist destination that attracted wealthy clientele.

“Data on the Northern Cape – from population growth and in-migration to housing demand indicators – suggests that the pace at which rental rates are growing is unlikely to be driven by the usual factors affecting rental prices in the country‚” Lebone said.