As inflation and rising interest rates dim the attraction of residential property purchases, and slowly recovering employment statistics improve demand for formal residential rentals, it appears the worst may be over for South Africa’s rental market.
Having suffered weak demand leading to record vacancies and rock bottom escalation during Covid, rental investors will doubtless welcome this change of tide. According to Jacqui Savage, National Rentals Manager for the Rawson Property Group, the road ahead is not without a few bumps, however.
“It’s definitely heartening to see the rental market gaining momentum after a long period of stagnation,” she said. “Vacancy levels are recovering nicely, and demand looks set to grow. That said, rising costs are putting increasing pressure on landlords to escalate rentals, while consumer inflation is eating into tenant affordability at the same time.”
This, she warned, could see an increase in late rental payments and a decline in tenants in good standing – a trend that has already begun, according to the latest TPN Rental Monitor report.
The report shows a small but notable drop in tenants in good standing between Q4 2021 (81.4%) and Q1 2022 (80.78%). The under-R3,000 bracket had the worst decline, with deterioration extending into the R3,000 to R7,000 bracket.
For the first time in seven consecutive quarters, the R7,000 to R12,000 bracket saw no improvement in tenant payment behaviour. The R12,000 – R25,000 bracket,…
