Western Cape tops SA rental charts as prices soar past R11,000
'The sustained influx of people to the metros in search of better economic opportunities is expected to continue fuelling demand for rental accommodation. Additionally, semigration trends to coastal areas, the Cape in particular, will probably continue to drive higher demand and higher average rentals in the Western Cape,' said Seeff.
According to Seeff, the average national rental exceeded R9,000 per month by the end of 2024, which was a milestone that reflected strong demand and economic pressure on tenants.
'The past year was relatively good for the residential rental market, with rents trending higher. According to rental property barometers, landlords enjoyed positive rental income growth.'
Rental income growth stood at 5.2% for the last quarter of 2024, significantly outpacing the national average house price growth of 0.8%. However, this rental growth tapered as the year progressed.
'The Eastern Cape enjoyed growth of 7.3% in 2023, but it fell to 4% at the end of 2024. Rental growth for the Free State reduced from 9.1% in the first quarter of 2024 to 3.5% by year-end.'
The figures showed other provinces also experienced a slowdown:
Mpumalanga: ended the year with 0.2% growth;
Northern Cape: improved slightly but closed the year at 2.6%;
Gauteng: ended with 3.4% growth; and
KwaZulu-Natal: recovered to end with 4.5% growth.
Conversely, the North West and Limpopo stood out for strong performances as North West showed a 7.2% growth in Q4 2024 and Limpopo had 11.1% growth which was well above the national average.
The Seeff Group believed economic conditions and interest rates would remain critical factors in shaping the rental landscape but also cautioned against unrealistic rental escalation expectations.
'If both improve, as expected, landlords can probably look forward to another good year. Landlords are cautioned to remain mindful of the economic pressures. Raising rents above the average rates may result in increased vacancy rates.'
Additionally, tenants are becoming more value-conscious amid cost-of-living challenges.
'Tenants are increasingly prioritising value for money, seeking smaller, more efficient units in well-located areas.'
Seeff also highlighted an encouraging trend of fewer tenants falling into arrears. Data from PayProp for the final quarter of 2024 showed only 17.1% of tenants were in arrears.
'Tenants are still spending about 44.1% of their income on rent, largely due to low-income growth and the impact of high interest rates.'
Tenant screening and professional property management are becoming more critical.
'Working with a credible rental agency, whether to source a tenant or manage your rental property, is a definite advantage in the current market. By doing so, landlords can mitigate risk and maintain a stable rental income stream.'
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