In residential and commercial sectors rental availability increased. The demand for rental properties is bigger and home ownership is declining because of the higher interest rate and inflation. This results in increased Bond repayments. The higher cost of debt and cost of living results in a drop in buying properties, a rise in distressed property sales, and more rental activity. Landlords that invested in property need to see a return on their investments, but due to the increased Bond repayments, rent goes up.
Although there is a surge in the demand for rental properties, many tenants can’t afford their rents when landlords increase rent payments. Lower interest rates will decrease the pressure on tenants and rent affordability. Borrowing will be cheaper and will reduce pressure on economic growth. This could potentially result in a surge in buying property, although many tenants will take some time before considering home ownership. Why? Renting became flexible; Short-term leases instead of long-term leases. Government housing regulations get updated regularly to ensure fairness and protect tenant rights.
For landlords, technology makes tenant screening easy and could be managed by competent rental agents. Technology also opened up the market to international tenants.
SUMMARY OF PROVINCIAL RENTAL AVERAGES Q1 2024 – according to PayProp
The national average rental growth rate is 3,8%
Gauteng: Average rent at R8943. Growth rate 3,5% On the brink of surpassing the average rental of R9000 and this potential growth is a reason for optimism among stakeholders.
Free State: Average rent at R6927. Second fastest growing province.
KZN: Average rent at R8770. Negative rental growth. Rent shrank by 0,4%.
Western Cape: Average rent at R10,300. Highest average in South Africa. Above national average of 3,8%. Growth rate 4,3% year-on-year.
Eastern Cape: Year-on-year growth is 5,6%.
Northern Cape: Decline in rental growth to 5,0%.
North West: Average rent at R6301. Lowest rentals.
Limpopo: Above average rental growth of 4,8%.
Mpumalanga: Average rent at R8369. Growth rate 1,2%.
TENANTS IN ARREARS
According to Johette Smuts, head of data analytics at PayProp, arrears could be partly due to tenants overspending during the December holidays.
In Q1 2024:
- North West: Tenants in arrears 25,7%. Highest percentage.
- Mpumalanga: Tenants in arrears 19,3%.
- KZN: Tenants in arrears 21,4%.
- Limpopo: Tenants in arrears 17,5%.
- Free State: Tenants in arrears 22%.
For more information, follow the links below:
Navigating the South African Rental Market in 2024: Trends and Predictions
What’s happening in the rental market
https://propertyprofessional.co.za/2024/07/01/whats-happening-in-the-rental-market/
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