Despite the latest interest rate cut, it is expected that the demand for rental housing will continue unabated, largely as consumers still feel the pinch of weak economic growth. Additionally, factors such as a sustained migration of people to the urban areas in search of economic opportunities will continue fuelling demand for rentals, according to rental property agents from the Seeff Property Group.
The latest PayProp and TPN rental barometers show the rental market’s resilience and strength, driven by economic conditions and improved tenant behaviour. Occupancy rates remain well contained, and even low, especially in the Western Cape, reflecting the sustained demand for rentals. Seeff’s rental property agents report shortages in urban areas, most acute in the affordable rental range of R5,000 to R15,000 per month. This ongoing demand, combined with limited stock, keeps the rental market robust and attractive, offering compelling opportunities for landlords and property investors.
For the first time, the national average rental rate has exceeded R9,000 per month, reaching R9,147. This milestone is led by the Western Cape, where the average rental price is R11,141, reflecting a notable annual increase of over 10%. Nationally, rental growth stands at 5.2% year-on-year, outpacing inflation and offering landlords strong real returns. Gauteng and KwaZulu-Natal also report solid growth, with average rents around R9,147, underscoring a resilient and expanding rental market.
Tenant behaviour has been a key factor in the market's recovery and stability. Despite ongoing economic pressures, tenants in good standing remain high at over 83% for the first months of this year. This is indicative of the effectiveness of rigorous tenant vetting processes, and ensuring tenants are able to afford the rents. Tenants are also spending a lower percentage of their income on rent than in previous years, which gives them more financial flexibility and reduces the risk of arrears.
The market’s recovery, rising rental rates, and ongoing stock shortages create compelling opportunities for property investors. With high interest rates and a weak economy making homeownership less attainable, rental demand remains robust. The national vacancy rate dropped to its lowest since 2016, underscoring strong tenant demand. In this environment, well-managed properties in prime locations, priced appropriately, can attract reliable tenants, and offer investors a steady stream of rental income, making the market attractive for both new and seasoned investors.
To capitalise on opportunities, investors should consider properties in key growth areas, such as the Western Cape and Gauteng, where rental growth is the strongest. Investing in sectional title properties, particularly one- and two-bedroomed apartments along with three-bedroomed family houses, especially in secure estates in urban areas with good transport access, and proximity to schools, can yield excellent returns.
These properties appeal to a broad range of tenants, including young professionals and families seeking affordability and security. By carefully selecting properties and implementing professional management, investors could earn a steady rental income stream while benefitting from long-term capital appreciation and building substantial wealth over time.
One of the most strategic decisions a property investor can make is to partner with a professional rental agent. A good agent offers a comprehensive suite of services that protect and maximise your investment. From rigorous tenant vetting, including credit and background checks, to ensuring all lease agreements are legally compliant with the relevant laws, thus providing peace of mind and mitigate the risks associated with rentals.
Rental agents can handle the day-to-day management of the property, including rent collection, maintenance coordination, and mediating any tenant disputes. This saves the investor valuable time and also ensures the property is managed efficiently and professionally, helping to secure a steady income and long-term capital appreciation. By leveraging the expertise and resources of rental property practitioners, investors can focus on growing their portfolio while their assets are professionally managed.
