Property to rent: Market boom expected this year

The most desirable rental features are good locations, excellent security, and fibre-readiness. Picture: Maahid Photos/Pexels

The most desirable rental features are good locations, excellent security, and fibre-readiness. Picture: Maahid Photos/Pexels

Published Jan 7, 2023


Ongoing rate increases and challenges around affordability will have many South Africans turning to rentals, says Grant Smee, managing director of Only Realty Property Group.

“This is good news for landlords who need to fill vacant homes – especially given that there isn’t such a large surplus of rentals on offer anymore.”

However, rising interest rates do make it challenging to realise a return, he notes.

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Although residential rentals started 2022 on the back foot, Jacqui Savage, national rentals manager for the Rawson Property Group, says it was suspected that things would improve over the course of the year.

And they did.

“Most first-time buyers hoping to capitalise on the low interest rates had already done so. Those still toying with the idea had less incentive to make the leap once interest rates started to rise.”

As expected, rising interest rates, together with escalating costs of living, soon added momentum to 2022’s previously sluggish rental market.

“What we didn’t expect was the rise in payment performance,” she says.

“Some price brackets saw tenants in good standing exceeding their pre-Covid levels, which was extraordinary given the tough economic times.”

While good payment performance will hopefully carry through into 2023, Savage says achieving decent yields will remain difficult for investors in the new year.

“The rental market is stable, but high property prices and property running costs paired with modest rental inflation does make for a tricky balance. Refocusing rental portfolios to tap into current trends can be helpful – something a lot easier to do with a rental expert on your side.”

Savage says the most desirable rental features at present are good locations, excellent security and fibre-readiness.

“Clean, contemporary spaces with indoor and outdoor areas are very popular. Family homes between R10 000 and R20 000 are so highly sought-after that they’re often successfully tenanted within days.”

Samuel Seeff, chairman of the Seeff Property Group agrees: “The rental market has largely recovered from the pandemic, with drastically improved payment trends and positive growth in rental rates. Semigration and a return of tourism have also boosted rental demand with some areas now reporting stock shortages, providing buy-to-let investment opportunities.”

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