Gauteng rental boom – one property going for R180,000 a month

Gauteng’s rental markets are booming. This is because fewer people can afford to buy properties in the current high-interest-rate environment.

Agents from the Seeff Property Group said this market – particularly Centurion and Pretoria – is picking up the slack from the sales market, which has shown a notable decline in transfers over the last two years.

The country’s high interest rates continue to impede sales volumes, which have largely now settled back down to below pre-pandemic levels.

The South African Reserve Bank has been in a hiking cycle since November 2021 and has raised interest rates by a cumulative 475 basis points since.

This has brought the repo rate to a 15-year high of 8.25% and the prime lending rate to 11.75%.

While these high rates have significantly impacted sales, they have also led to a boom in rentals, especially in Gauteng.

Data from the TPN show that Gauteng has the highest number of tenants, with almost four out of every ten households (37.8%) renting.

The province also enjoys the highest volume of inward migration as people flock to the metros in search of economic opportunities.

Pretoria, in particular, has a bustling public and private economy, contributing to the demand for rentals.

“As the seat of government and administrative capital, this translates to a strong presence of government departments, embassies, and state-owned enterprises that fuel economic and property market activity,” they said.

Many government officials and foreign delegates live in the Pretoria East area.

Rentals manager for Seeff Pretoria East, PG van der Linde, said rental properties are now in high demand and have been for the past year.

Seeff expects the market to only start slowing slightly after the expected interest rate reductions later this year, but nothing too severe. He expects a stable rental market with good year-on-year growth for this year.

“People rent for various reasons in the Pretoria East area, not just for financial reasons,” he said.

“The rental market is varied, attracting families with good schools and safe neighbourhoods. Young professionals and students are also drawn to the area’s affordability and convenient access to job centres and universities.”

Van der Linde said the Pretoria East area covers a diverse range of suburbs with varying price points for tenants. The University of Pretoria and UNISA in the area also contribute to the demand for rentals.

Despite being home to the most expensive suburbs in the capital, the most active price band in the Pretoria East rental market is R12,000 per month and ranges to around R25,000 for family houses.

Upper-end luxury homes attract much higher rentals, especially in estates such as Woodhill Golf Estate, where rentals range from R55,000 to R79,300 per month.

Rentals in the luxury suburbs such as Waterkloof and Mooikloof can reach R50,000 per month.

There is strong demand for all property types in the rental market, including high-end properties in exclusive neighbourhoods like Sandton and Bryanston.

Daily Investor found properties to rent in Sandhurst and Sandton where the owners are asking for R60,000 to R180,000 per month.

“A buoyant rental market also presents opportunities for potential rental investors who can capitalise on investing in the current flat prices of properties and earn good returns,” he said.

One area with good rental prospects is Centurion, according to Seeff Centurion manager Tiaan Pretorius.

The area offers many different suburbs and is popular with families and professionals. The busiest sector of the market tends to be for rentals between R9,000 and R15,000, but there is also good demand for higher-priced rentals.

The mid-market tends to always be the best to look at for rental investors, especially suburbs such as Die Hoewes, where you can invest in a two or three-bedroomed townhouse with good rental income and a positive rental yield of up to 10%, depending on the property.

Midstream Estate is another good choice for rental investments.

However, Pretorius cautioned that landlords must first investigate the potential rental income and yield before leaping into the investment, as conditions differ depending on the complex, location and property specifications.