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Best areas for landlords to invest in rentals in South Africa

Rental vacancies across the country were significantly low in the first quarter of the year. The best areas for landlords to invest in property to let in South Africa are the Western Cape and Gauteng.

High demand for rentals, low buying market

TPN’s Vacancy Survey Report shows that for the first quarter of 2024, there has been a significant increase in the number of households that are renting property. At the same time, home ownership is on the decline. In the first quarter of the year, residential rental vacancies reached historic lows. The national vacancy rate decreased to 4.42% from 6.69% in the previous quarter. Notably, it is the lowest rate since 2016.

TPN was established in 2000 and tracks tenant behaviour as well as developing rental payment profiles in South Africa. Experts and key role players in the property market recognise their database as a authoritative source of information on tenant behaviour in the country.

Homeownership on the decline

High interest rates appear to be the most influential factor in the upward trend in rental demands. With high interest rates, homeownership is difficult and even unattainable for many people. High unemployment rates and general political and economic uncertainty also play a key role.

Western Cape is a gold mine for landlords

The Western Cape is the province with the lowest number of vacant rental units in the country, according to Business Tech. Therefore, it is the best area for landlords to invest in property to let.

Residential rental vacancies dropped to 1.51% in the Western Cape. This is due to a combination of a lack of availability and a strong demand for rental properties. This is a notable 2.91% less than the national average. Rental properties in the Western Cape, therefore, are more likely to remain occupied than in any other province.

In addition to the Western Cape being the best province in terms of giving landlords who are letting property the best return on their investments, Gauteng holds the second place.

The second best area for landlords to invest in property

A total of 37.8% of Gauteng households live in rented accommodation.

Additionally, Gauteng’s rental vacancies reduced from 8.14% in the fourth quarter of 2023 to 4.3% in the first quarter of 2024. This significant drop happened as demand is outweighing supply.

This trend of people preferring to rent instead of buying property is expected to continue because of the high interest rates in the second quarter of 2024.

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