Rental market recovers, demand increases on rate hikes

Rental market recovers, demand increases on rate hikes

Category Rentals

The residential rental market in South Africa has undergone significant changes in recent years. As of 2023, the market is showing signs of recovery following a challenging period due to the COVID-19 pandemic, as well as economic challenges.

Seeff takes a closer look at the current state of the rental market in South Africa, which shows:

Market Overview
According to recent reports, the residential rental market in South Africa is currently experiencing growth, particularly in major metropolitan areas such as Johannesburg, Cape Town, and Durban. This is driven by an influx of people to the metros, increased demand for affordable rentals, particularly among young professionals and students who are seeking rental accommodation close to their places of work or study.

The market is also seeing a rise in the number of tenants who are choosing to rent for longer periods of time, as opposed to buying their own homes. This trend is largely driven by factors such as the high cost of property acquisition, and the uncertainty of the economy.

Rental Rates
Rental rates in South Africa vary depending on a number of factors, such as the location, size, and condition of the property. Generally speaking, rental rates have remained relatively stable in recent years, with some areas experiencing increases.

The average rental rate for a one-bedroom apartment in Johannesburg, for example, is currently around R7,000 per month, while a two-bedroom apartment typically costs around R10,000 per month. In Cape Town, rental rates tend to be slightly higher, with a one-bedroom apartment costing around R8,000 per month and a two-bedroom apartment costing around R12,000 per month.

Cape Town is now the most expensive area for tenants, largely due to the high demand for rental property boosted by the semigration trend as people will often look to rent before they buy. The most affordable areas to rent tend to be in provinces such as the Eastern Cape, but also other inland provinces such as Limpopo, Mpumalanga and North West. Gauteng still offers good value to tenants with many affordable areas to choose from.

Vacancy Rates
Vacancy rates in the South African rental market have also remained relatively stable in recent years, hovering at around 7% to 8%. This suggests that there is a healthy demand for rental properties, particularly in urban areas.

However, there are some areas where vacancy rates are higher, particularly in less desirable neighbourhoods or areas which are experiencing economic or social challenges. In these areas, landlords may need to adjust their rental rates or offer additional incentives to attract and retain tenants.

Landlord-Tenant Relations
Landlord-tenant relations in South Africa are governed by the Rental Housing Act, which sets out the rights and responsibilities of both landlords and tenants. This legislation provides a framework for resolving disputes between landlords and tenants, and ensures that all parties are treated fairly.

Overall, the rental market in South Africa is showing signs of growth and stability according to the latest rental barometers.

With increasing demand for affordable rentals and a trend towards longer-term rentals, there are plenty of opportunities in the market for both landlords and tenants. However, as with any investment, it is important to do your research and work with experienced professionals so that you are empowered to make informed decisions about buying, selling, or renting property in South Africa.

Investing in Property for the Residential Rental Market
Investing in rental property in South Africa can be a rewarding option for those looking to diversify their investment portfolios. With an increasing demand for rental properties in major metropolitan areas, particularly among young professionals and students, there is potential for steady rental income and long-term capital appreciation.

However, it is important to carefully consider all the factors before investing in rental property according to Seeff. Property prices can vary greatly depending on the location, and it is important to research the local rental market to ensure that rental income will be sufficient to cover expenses such as mortgage payments, property taxes, and maintenance costs.

Additionally, landlords must comply with South African rental laws and regulations, which can be complex and time-consuming. Working with experienced rental professionals such as the Seeff Property Group can help ensure that your investment is successful and profitable.

Author: Gina Meintjes