This year has seen the residential rental market strengthen further with landlords achieving good growth in their rental returns, especially in high-demand rental areas, according to rental agents from the Seeff Property Group.
Key industry reports from the Rode Report, Payprop, and TPN collectively paint a picture of a sector in recovery, where rental growth is steady, tenant arrears are improving, and demand for rental properties remains robust. We are seeing more favourable market for landlords. In many areas, especially the metros, shortages of rental stock offer favourable conditions for buy-to-let investors.
Despite some issues around affordability constraints on the part of tenants, largely due to the interest rate cuts being so delayed and the poor economic growth conditions, the overarching sentiment is one of confidence. Interest rate cuts over the last few months have eased the financial strain on tenants with the latest rate cut providing further relief.
Insights from the latest Rode Report for 2025 highlight the market as steady, albeit with significant regional disparities. National residential vacancy rates held firm at 6.7% in the first quarter, while rental growth which averaged at around 3.6% in March, has been consistently outpacing inflation since the latter part of 2024.
The Western Cape continues to be the stand-out performer, boasting the fastest rental growth in the country at 5.4%, a reflection of its persistently low vacancy rates which have stabilised between 2% and 3%. This region offers particularly good prospects for rental investors.
Gauteng, while the largest rental market in the country, is still experiencing more subdued conditions with regard to rental growth which hovered around a mere 1.2%. Tenant affordability issues are a big contributor to the pressure placed on rental inflation rates.
According to data from Payprop, rental agents have expressed significant confidence in the rental market. This is largely attributed to easing financial conditions including lower inflation and the interest rate cuts.
Positive factors in the current rental market further include consistent rental growth, and a significant improvement in tenant payment behaviour, with the proportion of tenants in arrears dropping to a near-record low. This being a notable favourable factor for landlords.
For many rental agents a lack of stock was raised as a challenge in the market. The influx of people to the metros in search of economic opportunities has contributed greatly to the higher demand for rentals, all of which point to potential opportunities for investors. Affordable rentals in particular are in high demand.
TPN data also continue to point to a positive rental market for the year, especially in view of the interest rate cuts and improved tenant stability. A high percentage of tenants are now in good standing, particularly in provinces such as the Western Cape and within the crucial R7,000 to R12,000 monthly rental bracket.
This trend is providing landlords with a greater degree of certainty and reducing the risks associated with rental income disruptions. TPN's data further indicates that rental escalations are successfully keeping pace with inflation, with national rental growth rates stabilizing around the 4.8% mark, again, notably outpacing current inflation rates.
The strongest growth currently observed in the market is in the mid-priced rental range, specifically for properties priced between R5,000 and R7,500 per month. This again highlights the sustained demand for affordable and mainstream housing options across the country.
The rental market remains dynamic with healthy growth which is largely keeping pace with inflation. Regional disparities, however, remain a key feature of the market, with the Western Cape continuing to lead while Gauteng lags.
The Seeff Property Group is a significant player in the rental property market with skilled and experienced tech-enabled rental agents assisting landlords to maximise the returns on their rental investments. Contact your nearest Seeff office to find out what they can do for you.
