- Supply still outstripped demand for rental accommodation in the last quarter, says specialised credit agency TPN.
- Things were moving in favour of landlords, but then came the July unrest, and December travel bans, reducing demand for housing on two fronts.
- Western Cape vacancies were sharply down, though, and lack of property development in the Eastern Cape means too few places to rent.
- In Sandton, oversupply persists.
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In the fourth quarter of 2021, tenants had the upper hand in South Africa on average, specialist credit bureau TPN says. But not everywhere, and even that national average is moving in favour of landlords again.
For the quarter, its market strength index stood at 47.2, TPN says in its latest vacancy survey. At 50, supply and demand is in equilibrium, and anything below that indicates landlords struggling to fill up rental accommodation.
That finding is backed up by pricing data, which shows that average rentals increased by 0.4% in the quarter, as "tenants remain highly price sensitive", TPN says. Such an increase puts landlords in the red, considering rate increases, inflation in property expenses, and higher interest rates – which are expected to climb further still.
Demand was hit on two sides, TPN says. Travel bans in December, and the resultant drop in international travellers, saw landlords switch short-term holiday rentals back to long-term rentals, while the July unrest and associated job losses meant domestic demand for rentals declined.
But the index is "clawing its way back to 50", says TPN, so landlords may have a better time of it during 2022.
The averages belie a highly variable picture across provinces and suburbs, however.
In Sandton, vacancies were recorded at 11.6%, compared to 3.8% in Soweto, and 4% in the Cape Winelands. Cape Town's southern suburbs also had a low vacancy rate, at 7.8%, while the northern suburbs came in at just above 10%. By contrast, vacancies in Johannesburg central were at 17.1%.
In Gauteng there is money; rental demand is back to pre-pandemic levels, TPN says. But there is also a significant over-supply of rental accommodation.
Meanwhile, there is a lot less money in the Eastern Cape, where fewer than half of households receive a salary. But there is little property development too, which means vacancies were well below the national average, at 8.2%.
Across the Western Cape as a whole, demand for rentals outstripped supply, making for a sharp drop in vacancies from 14.4% in the second quarter to 11.4% in the fourth quarter – but TPN warns its survey was conducted before the December travel bans, which would have changed the picture.
(Compiled by Phillip de Wet)