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A survey conducted by TPN Credit Bureau shows that vacancy rates in South Africa’s rental market continued to drop in the first quarter of 2023, highlighting the most in-demand price bracket for South Africans looking to rent a home.
According to the latest TPN Vacancy Survey, the national vacancy rate – the number of vacant properties – dropped from 8.26% in Q1 2022 to 6.19% in Q1 2023.
In terms of demand, it has an inverse relationship with the vacancy rate, meaning the lower the vacancy rate, the higher the demand.
Provincially, the Western Cape remains the best rental market, reflecting its lowest vacancy level since 2016 at 1.66% – 4.5% below the national average. This is then followed by Gauteng (7.31%), Kwa-Zulu Natal (10.13%), and the Eastern Cape (10.32%).
The report noted that the remaining provinces in South Africa have all maintained a very high demand rating in the past three quarters, as a lack of supply has ensured a healthy market. However, many consumers in these provinces cannot afford to enter the formal rental market despite the strong demand.
The most in-demand rental value band
While the report noted that the vacancy rates for most rental brackets are very similar, properties with the lowest vacancies are those priced between R7,000 and R12,000 per month – with a vacancy rate of 5.07%.
This is followed by properties in the R3,000 to R7,000 price category, which has a vacancy rate of 6.54%.
On the other end of the spectrum, the price brackets between R12,000 and R25,000 and more than R12,000 have experienced an increase in their vacancy rates.
Properties priced between R12,000 and R25,000 per month have a vacancy rate of 7.16%, while those priced at over R12,000 present a rate of 7.84%. These rates are 0.97% and 1.65% higher than the national average and 1.81% and 1.95% higher than their rates recorded in Q4 2022, respectively.
The report noted that this is partly due to the rising living costs in South Africa, forcing many South Africans to reprioritise their budgets as salaries struggle to keep up with stubbornly high inflation and other expenses.
“Given rampant inflation, another interest rate hike, and the cost of mitigating the effects of load shedding – the latter which is potentially the most taxing of all – and it’s clear that consumers are buckling under increased financial pressure,” said TPN.
Read: The state of South Africa’s property market – experts respond to latest rate hike
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