The property market has long favoured landlords, however, with interest rates forecast to stabilise and maybe fall somewhat at some point this year, this might change.
Adrian Goslett, the regional director and chief executive of RE/MAX of Southern Africa, advised landlords to maintain contact with their local real estate practitioner in order to stay current with changing trends.
According to the most recent Q3 2023 PayProp Rental Index, average rent increased year on year by 4.7% in July, 4.4% in August, and 4.9% in September, the biggest year-on-year gain observed in any month since 2017.
This research showed that, nationally, 17.5% of tenants were behind on their rent in Q3 2023, compared to 18.4% in Q2. This is the lowest amount recorded since they started tracking rent arrears in the PayProp Rental Index in 2020.
“Coming off a year of high interest rates and high inflation levels, affordability is likely to remain a concern for consumers in the year ahead. Landlords who have reliable tenants should keep this in mind before applying any annual rental increases,” Goslett said.
“Although the rate of defaulting tenants is decreasing, it is sometimes better to hold onto a reliable tenant than to take on the risk of finding a new tenant.”
He noted that if interest rates fall, making house loans more accessible again, there may be a drop in demand for rental homes.
“It will take some time for interest rates to be appealing enough for aspiring homeowners to take the plunge and to move away from renting,” Goslett said.
“The key to success as a landlord is keeping one ear to the ground so that you know when and by how much to adjust your rental rates. Each suburb will have its own nuances, which is why it is so useful to pair up with a local real estate agent.”
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