Johannesburg – The residential rental market continues to struggle as it faces an “exodus” of more creditworthy tenants as the record-low interest rate environment spurred them to buy their first homes.
A clear spike in buying activity in the third quarter of 2020 from the FNB Property Barometer has since moderated as banks have all but serviced applications from low-risk customers.
Along with this underlying change in the market, households generally are under financial pressure and this has seen rental growth stall.
The latest PayProp Rental Index shows a deceleration in the first quarter to zero year-on-year growth in March, after an increase of 1% in January and 0.7% in February. On a quarterly basis, this is an “uptick” to 0.5% in Q1 from 0.2% in Q4. This comes after five consecutive quarters of slowing growth.
Factor in inflation of 3.1% fort he first quarter, and it is clear that this is a tenant’s market.
In Gauteng, growth was 0.7% in the first quarter, while the other two large markets, the Western Cape and KwaZulu Natal were in decline.
The number of clients in arrears has continued to improve since following a spike in Q1 and Q2 of 2020.
The reasons were obvious as some were not earning an income, while others were forced to take a salary cut or “were uncertain about their future cash flow.
