Good news for South African property investors 

South Africa’s property sales market declined notably in 2023, while the rental market soared as many would-be buyers turned to rentals for more affordability and reduced risk.

This is according to the Seeff Property Group, which attributed this to the spike in the country’s interest rates.

In 2023, the South African Reserve Bank continued its hiking cycle and upped interest rates by 125 basis points. This brought the repo rate to a 15-year high of 8.25%, dampening the country’s property sector.

While property sales and house price growth slumped, the rental market benefitted.

The Seeff Group experienced a significant increase in its rental book in 2023, with areas seeing growth of 17% to 19% and, in some cases, doubling their rental book over the last three years.

“With interest rates hitting a 15-year high, weak economic conditions and demographic shifts, the demand for rentals has increased notably in most areas,” the company said.

“It is especially prevalent in the affordable price bands where rising urbanisation is offering huge opportunities for developers and rental investors.”

However, even the high-end luxury sector of the market is buoyant, said Seeff Atlantic Seaboard and City Bowl licensee Ross Levin. 

While the R20,000 to R35,000 per month is the most in-demand, there is also plenty of activity in the R40,000 to 60,000 range. High-end rentals still reached R80,000 to R100,000.

Seeff Sandton rental manager Caché Pasquale said that while the R10,000 to R15,000 per month range is the most active, Seeff has achieved up to R92,250 monthly in Hyde Park. 

The Pretoria East luxury sector is also seeing significant activity, with high-end tenants paying up to R79,300 in Woodhill Golf Estate.

Seeff Property Group chairman Samuel Seeff

PayProp data has shown that the best growth rates for rental properties were in the inland and upcountry provinces such as North West (9.3%), Mpumalanga (6.3%), and the Northern Cape (6.2%). 

The main economic provinces – Gauteng (4.7%), Western Cape (4.3%) and KZN (2.5%) – achieved considerably lower growth. 

The Western Cape remains the most expensive, with an average rental rate of R9,946 per month.

The upside of the improved rental market outlook is that buy-to-let and investment property sales rose to the highest levels since late 2008, according to mortgage originator Ooba. 

These properties comprised around 14.85% of all mortgage applications by the end of 2023. 

Seeff said that, with house prices largely stalled over the last year, investment buyers can find properties at historically low prices. 

However, Seeff Richards Bay licensee Elaine Vandayar warned that while potential rental investors can earn a substantial return on their investment, they must do their research as it is not an investment without risk.

“Check out the average rental pricing and speak to a rental agent in the area that interests you,” she said. 

“Obtaining this information can assist the landlord in determining whether the investment is worthwhile by indicating the amount of rental income they may anticipate.”

The highest demand usually tends to be in the low to mid-market price ranges and for properties closer to places of work or with access to good transport networks. 

“The objective is to earn a consistent income and return on your investment, but you would also want to keep your unit filled with a good calibre tenant who will pay their rent on time and look after the property,” she said.

“The downside of a tough economy could mean higher tenant defaults. Combined with a more complex legislative and regulation environment, this makes managing a rental property all the more important.” 


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