Affordability has become a key driver for many rental markets across the country according to rental agents from the Seeff Property Group.
More people are looking to rent which is driving excellent demand in the more affordable areas, although this is not likely leading to higher yields for landlords, largely due to the prolonged low economic growth climate.
The PayProp Rental Index for the first quarter of this year shows that rental growth has slowed to an average of 3.8% for this year. Given that the trend appears to be that rental growth is declining month-on-month, the average for this year could potentially come down further. Much of this is due to the weak economic climate.
According to Rochelle Holland, manager for Seeff Johannesburg North West, landlords should continue to be reasonable with their expectations of rental pricing as they are seeing that overpriced properties are standing dormant, and are not being leased.
Tenants too need to watch their monthly spending, and closely monitor their debt payments. She says there is a trend of an increasing number of tenants not qualifying due to negative payment behaviour.
The national average monthly rental is only marginally up year-on-year to R8,654 (from R8,353 in the first quarter of 2023). The average for Gauteng is now close to R9,000 per month, up by 3.5% which is below the average inflation and national average rental growth over the last year. The upside is that rents are still more affordable in the Gauteng metro areas compared to the Cape for example.
Also notable from the latest TPN index is that just over 70% of all rentals nationally fall below R10,000 per month. Of that, about 25% fall below R5,000 per month. 16.1% of the rental market fall in the R10,000 to R15,000 price bracket with only 10% of tenants falling in the rental price category above R15,000 per month.
Rochelle Holland from Seeff Johannesburg North West confirms that the most active price band in their area is the lower to mid-rental market which is seeing much activity at the moment. Properties priced between R8,000 to R10,000 are leased quite quickly, she says.
In Eagle Canyon Golf Estate, the sectional title rental market is highly active in the price ranges of R18,000 to R22,000. Standard-sized free-hold properties inside the estate are renting for between R25,000 and R30,000 while large, luxury homes are achieving up to R40,000 to R45,000 per month.
Sectional title units in Eagle Canyon are renting out at around R19,075 on average per month, clusters at R28,850, and freehold houses at R43,400. Eagle Canyon has achieved some of the highest rentals in the Johannesburg North West area over the last year.
That said, rental rates have remained under pressure due to the economic climate, and there has not been any significant rental price growth. Tenants tend to renew their leases when they are placed in well-priced properties, rather than moving around.
She says further that affordability is a key feature of many of the suburbs of Johannesburg North West. Suburbs such as Radiokop, Wilgeheuwel and Honeydew which are located around the Eagle Canyon estate area are renting at around R7,350 per month on average at the moment.
According to the 2022-Census, Gauteng has the highest percentage of people who live in rented accommodation at 36.6 percent. Lifestyle and affordability are big drivers of the demand for rental properties in the Johannesburg West area and you can get really good value for your money here. This explains why the area remains popular with tenants.