The rental market has been active for some time now, but with interest rates beginning to stabilize, market conditions may soon change.
Landlords should keep a close eye on their local real estate market to ensure they can retain and attract reliable tenants in the coming year.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, says the property market has been favoring landlords for some time now.
But with interest rates expected to stabilize and hopefully decline slightly at some point during the year, Goslett suggests homeowners stay in touch with their local real estate practitioners to stay on top of trends as they move forward. that things change.
According to the PayProp rental index for the latest third quarter (Q3) 2023, the average rent increased year-on-year (yoy) by 4.7% in July, 4.4% in August and by 4.9% in September – the highest annual growth on record since 2017.
The report also states that “nationally, 17.5% of renters were behind on their rent in the third quarter of 2023, compared to 18.4% in the second quarter.
This is the lowest figure seen since we started tracking rent arrears in the PayProp Rental Index in 2020.”
On that note, Goslett says affordability will likely remain a concern for consumers in the year ahead, despite a year of high interest rates and inflation.
“Landlords with reliable tenants should remember this before implementing annual rent increases. Even though the rate of delinquent tenants is decreasing, sometimes it is better to keep a reliable tenant rather than take the risk of finding a new one,” suggests Goslett.
He adds that if interest rates fall, making home loans slightly more affordable again, there could be a drop in demand for rental properties.
However, he also notes that it will take some time for interest rates to be attractive enough for aspiring homeowners to take the plunge and move away from renting.
“The key to success as a landlord is to stay tuned so you know when and how much to adjust your rental rates. Each suburb will have its own nuances, which is why it’s so helpful to team up with a local real estate agent,” says Goslett.
If a landlord needs to find a new tenant in the coming year, apart from using a letting agent to properly vet and screen potential tenants, setting a fair rent amount will also be crucial in attracting a reliable tenant.
“The most responsible tenants are also generally the most informed, who know what comparable rents cost,” he warns.
As a final piece of advice, Goslett says the coming year offers many opportunities for both landlords and tenants.
“To get the most out of the market conditions you find yourself in, partner with a trusted real estate professional for reliable advice,” he concludes.