According to the latest PayProp Rental Index, the average residential rental in SA rose to R9218 in the second quarter of this year, which was 5% or R433 higher than in the same period of last year.
In addition, the national percentage of tenants in arrears fell to it’s lowest-ever level of 16,9%, while the arrears percentage also fell to 73,7% of one month’s rent.
This is positive news for buy-to-let property investors, whose renewed enthusiasm for the market is revealed in the investment subindex of the latest Absa Homeowner Sentiment Index. (AHSI)
This subindex hit an 84% positive rating in the second quarter, which was the second-highest level for this subindex since it started in 2015, and a whopping increase from 72% in the second quarter of 2023, when the post-Covid interest rate increases were really starting to hurt both tenants and landlords.
Read more: Choosing and Managing Your Rental Property Portfolio
The AHSI also notes that the share of property transactions concluded by legal entities (trusts and companies) rose from 12,4% in the first quarter of the year to 13,6% in the second quarter, and that although not all legal entities are set up for the purpose of property investment, this increase does support the positive investor sentiment observed in its survey.
Overall, it notes, property investment is still perceived to provide good prospects for value growth and rising returns, and while there are still concerns about the economy and South Africa’s future, these declined sharply in the second quarter.
“Property ownership for investment is driven by a common goal of having a stable and high-yielding asset as well as consumers realising the advantages of earning additional/passive income. With perceptions of a recovering economy, South Africans investing in property anticipate its current and future monetary potential as well as being an investment for future generations,” the report says.
Meanwhile, the buy versus rent sentiment also tracked in the AHSI showed a 4% year-on-year gain to 75% in the second quarter, but a noticeable decline in the number of respondents currently renting and actively looking to buy.
Among the 25% who still prefer renting, flexibility and affordability were the key drivers, indicating sustained demand for rental homes and support for rising rentals for the foreseeable future.
