Recent years have been rewarding for landlords with positive rental growth, solid yields, improved tenant behaviour, and relatively low vacancy rates depending on the area. Seeff expects the positive trend to continue this year, with our rental agents highlighting a few of the key themes and trends for the rental market this year.
Rental growth will likely slow, but remain ahead of inflation. Various rental barometers have indicated that rental growth is expected to come down slightly, but will remain stable. Predictions are around 4.5% to 5.5% on average for 2026, but with the usual regional variances where some provinces will be higher, and other lower as has been the case in recent years.
According to the latest information from PayProp regarding growth rates during the later part of last year show that Limpopo achieved the highest growth at a phenomenal 10.9%. This was followed by the Cape Regions (Western, Northern and Eastern) with excellent growth of around 7%.
The Free State registered growth of around 5.1% and Gauteng and KZN both at around 3%. Growth declined marginally for Mpumalanga. Mostly notably, with the exception of Gauteng and KZN, the growth rates significantly outpaced the average inflation rate of 3% for the 2025-year.
In terms of average rental rates, the Western Cape continued to lead at R11,635 per month on average. This was followed by Northern Cape (R10,111), Gauteng (R9,321), KwaZulu-Natal (R9,293), Limpopo (R9,283), Mpumalanga (R8,441), Eastern Cape (R7,608), North West (R7,179), and Free State (R7,120).
Regional differences are likely to persist. For example, we are likely to continue seeing smaller provinces where rental rates are lower will likely see slightly better growth compared to the main economic provinces. Stock levels will also play a role in the growth outlook, as will the state of household finances.
High personal debt levels combined with the effect of stubborn economic growth will also mean that the highest demand, especially in the busy urban areas will remain on affordability. Rising property costs, both in terms of property taxes and utilities will also remain a growing concern for the property market, as this often impacts the rental rates and affordability.
Generally, the rental market is set to continue seeing strong demand, driven by rapid urbanisation. The highest demand will tend to be in areas which offer good proximity to economic hubs, but generally focused on affordability and access to amenities including transport. Areas with good schools will also continue to be in demand among family tenants.
Many areas have reported stock challenges over the last year. This will continue providing excellent opportunities for rental investors, and combined with strong yields, there is opportunity in certain areas. Seeff agents, however, always advise that investors do their research, and work with local rental experts to assess the market before making decisions.
Given the more upbeat outlook for the economy and property market, and expectation of further interest rate cuts will further boost rental investments and will likely then increase stock levels. The weak price growth over the last two years, especially in some of the high demand urban areas, could potentially encourage more investment in the rental market.
Rental properties fit for purpose is another important trend that landlords need to take into consideration. Given that tech dominates so much of our daily lives both at work and at home, fibre-ready units are now preferred. Additional features which are in demand include good security as well as a level of sustainability in the event of water and power outages.
The rental market remains heavily segmented with a strong affordability sector, a notable middle-income sector with demand for family homes, clusters and townhouses. There is also a luxury sector where luxury homes in good locations, and often within security estates are in high demand in certain areas.
Earning favourable returns and a strong yield will naturally depend on ensuring the property is well maintained and that it can earn a steady monthly rental income. Finding quality tenants who meet their monthly rental obligations, and take care of the property will continue to be a priority for landlords.
Likewise, Seeff’s agents always remind landlords of the vital importance of keeping their properties well maintained to ensure it can attract good calibre tenants and a good rental income. Tenants are often likely to a bit more for a well located and maintained property.
Working with a skilled local area rental agent remains a competitive advantage for landlords. Such an agent provides an edge by leveraging deep community knowledge to attract and vet high-quality tenants quickly. Their expertise in local pricing trends ensures that rental growth remains competitive, maximising the landlord's return on investment. Experience in managing tenants and rental properties is a vital addition to any rental property.
