What you need to know about the rentals market

The property industry relies on a stable economy throughout countries worldwide. This is especially true in South Africa, where unpredictable elements come into play in a developing nation. Ynnis Willson, Head of Rentals at Jawitz Properties, provides valuable insight into what's expected for the rentals landscape over the remainder of 2022.

Good news for landlords

If you have a rental property portfolio, you can anticipate favourable conditions this year. "The national trend is an upward trajectory in terms of demand and a downward trend in terms of vacancy ratios which should lead to better yields for landlords," says Willson.

However, this trend isn't reflected all over South Africa. The Western Cape, a semigration hotspot, will see the strongest recovery as single people and families choosing to move to the province for a higher standard of living. On the opposite side of the spectrum is KwaZulu-Natal's rising vacancy ratios. This is due to the perceived instability of the province following the riots in July of 2021 and floods in April 2022.

Quality of tenants is vital

Landlords would be wise to practice caution during this time of uncertainty. A high unemployment rate coupled with disposable incomes means pricing will be affected. Potential tenants have a role to play as dependable sources of income for landlords. While vacancy ratios close the gaps under pressure, securing a quality tenant who possesses job security, a long-term indication of renting and stable monthly payments has become essential.

Consider investment opportunities carefully

Willson believes that investors looking to purchase property for rental purposes should be encouraged by the demand. Although this national statistic doesn't concern every province, landlords can still identify the most profitable properties with the assistance of a practitioner who specialises in area profiling. This can help determine ideal locations.

The Eastern Cape, for example, has maintained the lowest average vacancy rate over the past six years. This is due to an increase in property owners in this province versus investors. It stabilised the number of vacancy ratios by reducing rental properties in the market.

Pandemic prices enter the chat

With the tourism sector of the real estate industry greatly affected by the COVID-19 pandemic, consumer confidence has taken a knock. Investors who favoured tourism may need to look at adjusting their focus to residential being the future. With more people working from home and cutting back on travelling than ever before, it makes sense to hone in on this emerging demographic. While the Western Cape is a tourist destination, landlords should shift gears into noticing the upward demand for residential rentals.

The quality of tenants is an important factor regardless of which province you're in. Landlords experience a higher risk of instability of income in areas where competitive rentals are available. Areas that are in high demand generally are the ones that offer security, convenient access to schools and work and close to amenities with a short travel distance to leisure activities.

Across the country, rental prices vary amongst provinces. Considering the average, South African middle-income household the ratio of R7 000-R12 000 is the norm. This also depends on the condition of the property and whether it's best suited for short/long term occupancy.

Listen to the market and a property professional

As a landlord or investor, it's understandable that you want the best return on investment possible. It's good to remember that a quality tenant who is able to pay a lower rental than you set out for is better than no tenant at all, or one who defaults on too high a rental.

Willson advises that you consult a property professional throughout your investment and landlord journey. Jawitz Properties has a team of experienced real estate experts who hold a wealth of knowledge in the rental market. We will be able to assist you with the latest market-related trends and advice on everything from pricing property to maintenance. Contact us today for all your property needs.