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Even with the tough economic times, high unemployment, and a bit of a political mess, a lot of tenants have still been managing to pay their rent.

This has been a bit of a relief for property investors who rely on that steady income to balance out rising costs.

But keeping tenants on track hasn’t been a walk in the park. Investors have had to get stricter with vetting and chasing down payments to keep their cash flow steady, especially with maintenance, security, and other costs creeping up.

In this tight financial climate, property investors are walking a fine line—setting rental rates that are realistic while also trying to avoid empty units.

BusinessTech reported that on a national level, rents have gone up by 4.29% year-on-year, which is a slight drop from the 4.87% increase seen the quarter before – a sign of the broader economic squeeze and how tough things are on people’s wallets. In this rental landscape, landlords have had to be extra careful, tweaking rental prices to make sure they stay competitive and keep tenants around.

In Gauteng, rental growth has slowed for three quarters in a row. After bouncing back in the first half of 2023, growth has dipped to 3.32% by the second quarter of 2024.

Over in the Western Cape, which had been seeing strong growth, there’s also been a slight dip, with the rental increase dropping from 7.10% in Q1 2024 to 6.98% in Q2. These shifts show that even in the high-demand areas, landlords are having to be more careful with rent hikes to match what tenants can actually afford.

KwaZulu-Natal saw a small bump in rental growth, up from 4.86% in Q1 to 4.97% in Q2. However, high vacancy rates there are still putting pressure on investors, who need to stay on top of rental collections to keep cash flow steady.

Meanwhile, the Eastern Cape saw some growth too, with rents going up from 4.16% in Q4 2023 to 4.7% by Q2 2024. However, with the region’s high vacancy rates, the market is slower to react to changes in demand.

When it comes to what it costs to rent per provincial rankings, the Free State is the cheapest province in South Africa to rent property, while the Western Cape is the most expensive.

The Free State is the most affordable spot for renters, with the average rent for a full-title property sitting at R6,557 per month. Limpopo isn’t far behind, with rents averaging R6,626, while the Northern Cape comes in third at R7,815.

On the flip side, the Western Cape takes the top spot as the priciest province, with rents almost double what you’d pay in the Free State, averaging R12,755. Gauteng and KwaZulu-Natal aren’t too far behind, with average rents of R9,652 and R9,632, respectively.

While property investors are hoping for rental growth to help cover rising costs, the market’s sensitivity to prices has pushed them to prioritise quality tenants over pushing for big rent increases.

[source:businesstech]