Did the rental market collapse or was it just a traffic accident? The old argument is that “securing the roof over your head” means there is an endless need for housing and homeowners can negotiate on their terms, says Michelle Dickens, general manager of the TPN Credit Bureau.
Nationally, vacancy rates have stabilized at 13.15%, while a demand rating of 53.01 confirms that tenants are still in the market but in reduced numbers, and a rating of the offer of 68.76 means landlords are vying for that limited tenant attention, Dickens said.
“It’s a tenant market, an oversupply of vacant properties drives rental prices down as tenants are able to look for a better deal. Price sensitivity is a critical consideration and remains the most important aspect for a tenant, followed closely by safety, then distance from work, schools and stores.
According to Dickens, owners have a more pessimistic view of the market. They reported a weaker demand view at 51.50 and perceived a strong supply rating of 73.32.
“There is no doubt that the number of tenants who respond to their real estate advertisements is lower. In some cases, owners do not declare any interest in the property until the price is lowered and reposted. Perception aside, the reality of the vacancy rate reported by owners is high at 14.29%.
Dickens wonders if landlords have reacted more slowly to the reduction in their rent, which has made them bear the brunt of the weight of vacant homes.
Real estate agencies
Real estate agents benefit from foot traffic in their store, or numerous listings for a variety of properties to attract the reduced number of tenants, the general manager said. Therefore, the real estate agent’s perception of market strength indicates slightly higher demand from tenants than perceived by landlords.
“Realtors also perceive the supply of rental property to be strong at 63.31 but not as overburdened as the owner’s perception of 73.32 – this may be an impact of the real estate agent’s real estate supply which is created by landlords renting out their tenant purchases to multiple agents at the same time, ”she said.
Nonetheless, real estate agents appear to have better occupancy with only a 9.87% vacancy rate, Dickens pointed out.
Gauteng – home to half of the rental population
Gauteng is home to 47% (source: StatsSA’s General Household Survey) of all renters and even so, the demand rating fell below 50 to 48.15, coupled with a still strong supply rating of 73.90.
The aggregation of demand and supply as reported by owners and real estate agents results in a severely constrained market force of 37.13. Perception of recovery is not yet reflected in the data.
Although realtors and owners in Gauteng are facing lower demand, vacancy rates in the second quarter fell from 13.8% to 12.4% quarter-on-quarter.
Sandton remains a concern with a vacancy rate of 26.7% – the impact of office-to-housing conversions, with large rental portfolios of new, quality units with attractive incentives putting pressure on this sector.
Western Cape – Home of the Highest Paid Renters
While by no means a full recovery, 82.92% of tenants in the Western Cape are back in good standing, TPN said. “And even nicer, only 5.6% of Western Cape renters are in non-paying status. The biggest challenge for arrears is the 11.48% of Western Cape tenants who remain in partially paid status, ”Dickens said.
“Hold on to your tenants as tenant demand also deteriorated to 51.21. The strong supply rating of 70.51 maintains market strength in oversupply territory at 40.35. Homeowners and real estate agents are not yet feeling a recovery in the market. “
Dickens said the Cape Town story is a double whammy of increased supply caused by the conversion of short-term vacation rentals into long-term rentals and work-from-home opportunities that allow tenants to s ‘settle in the more affordable northern suburbs.
“Overall, the Western Cape’s vacancy rate of 14.4% will be of concern as this is the first time the vacancy rate has hit double digits.”
KwaZulu-Natal – home to the winning tenants of the Constitutional Court
TPN noted that the Constitutional Court recently found that occupants of the Ingoyma Trust land had been unfairly charged with rent and ordered the Ingoyma Trust to reimburse tenants with the amount at stake in the billions.
In the private open market, homeowners and real estate agents perceive a stable supply score of 58.13, meaning the potential shock of the pandemic to market force has been cushioned by a recent history of limited supply. new inventory of rental housing.
The demand rating has declined over time but still supports sufficient demand for the available supply, the credit bureau said.
This translates into a province that has managed to maintain a positive 2.4% escalation. The north coast, which is the region benefiting from a limited new supply and housing high-end tenants, felt the impact on vacancy rates reaching 17.2%.
Eastern Cape – home to the most popular market
“Simply put, supply has not kept up with demand. A new supply of no consequence in the rental market has kept the supply rating at a current level of 50, with a demand rating of 69.84, providing a market with excess demand at a market force of 59.92, ”Dickens said.
Collection of tenant payments is painfully slow, but landlords can be reassured that 78.38% of tenants are back in good standing for the first quarter of 2021, Dickens said.
She said tenants behind in pay are still recovering from their partial, total or temporary loss of income during the hard foreclosure of a year ago, as indicated by the 13.9% of tenants stranded in the status of partial payment.
“The biggest threat to the recovery of the residential rental market remains the still high and rising unemployment rate. Household size is expected to increase as coliving becomes an affordability solution as tenants recover financially. “
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