South Africans rush to buy properties in three provinces

South Africans are investing in buy-to-let properties amid a growing rental shortage, particularly in the Western Cape, KwaZulu-Natal (KZN), and Eastern Cape, where strong demand, rising rents, and attractive yields are driving investor interest.

According to the Seeff Property Group, buy-to-let investors are again returning to the property market. At the same time, many areas are experiencing significant shortages of rental properties.

This is supported by recent housing data from Ooba, which reported that 13.9% of its recent home loan applications were from buy-to-let investors.

FNB reported a similar trend and highlighted a particular trend in the affordable price bands, which comprise 30% of recent home loans.

While the Western Cape leads the buy-to-let investment boom, there has also been notable growth in the Eastern Cape and areas in KZN, according to Seeff’s branches.

These include Hillcrest and the Upper Highway area, the Midlands, and up the North Coast, including Ballito, and as far as Richards Bay.

The favourable conditions are further bolstered by new developments which are underway in the province. This includes upgrades to the Durban and Richards Bay ports, as well as several developments, including Club Med, which is being built near Ballito.

The KZN rental market has again become very attractive for landlords, Seeff said. It is now achieving inflation-topped rental growth of 4.5% YoY, just behind Gauteng in terms of average rent.

Notably, rents have risen faster compared to property prices, which still lag at just 2.2% over the last year, according to Lightstone data.

Payprop’s Q1 2025 rental index also reported that KZN demands some of the highest rents in the country. As of the first quarter of 2025, the average rental price in the province was R9,170, R400 more than a year ago.

Although KZN’s rental growth has been relatively slow, at 4.5%, Payprop said it could be on track to overtake Gauteng later this year.

Areas to watch

Sean Moffat and Joan Ridl, licensees for Seeff Midlands, which includes Pietermaritzburg, Howick and Hilton, said there are plenty of opportunities for investors in the area to capitalise on steady monthly income streams.

Hilton is particularly popular due to its growing local economy, excellent schools, and amenities, which attract parents and other interested parties. Tenants are particularly interested in estates, complexes, and freestanding homes in the area.

Thandeka Prins, rentals administrator for Seeff Midlands, added that there is also demand for small cottage rentals.

This could be a good opportunity for property owners in Hilton to convert existing garages and outbuildings into cottage units. A one-bedroom unit can earn around R6,500 per month.

Rates in the area vary from around R5,500-R8,500 per month for small apartments and up to R18,000 for two-bedroom units.

Properties in the estates range up to R25,000 per month, with houses reaching R48,000 per month in The Gates Estate and R25,000-R30,000 in Garlington Estate, based on leases concluded by Seeff.

Pietermaritzburg and the Howick area are more popular for affordable and commercial rentals. This is due to the business opportunities fueled by exposure to a larger public in these areas.

Thandeka said the R6,500 – R10,000 per month rental range offers particularly good investment opportunities.

The average rental escalation is approximately 8%, depending on location, the number of rooms, whether the property is furnished, and other comparable properties on the market in the area.

Elaine Vandayar, licensee for Seeff Richards Bay, explained that there are promising opportunities for rental investors there, too. In particular, opportunities lie in the sectional title market, especially in the R700,000 to R1.2 million price range.

These offer attractive returns. Sectional title units selling for R1.2 million can achieve monthly rentals of R6,500 – R7,000 at a yield of about 5%.

The appealing coastal lifestyle and strong local economy are drawing a continued influx of professionals and families seeking secure, well-located housing near major employment hubs.

Investors can therefore enjoy steady rental income and the potential for capital appreciation as the area’s development and essential amenities like schools and medical facilities continue to attract new residents.

Rental rates tend to average at around R5,000 – R8,000 for apartments, and R10,000 – R15,000 for townhouses.

Freestanding houses range between R13,000 and R18,000. Seeff’s highest rentals over the last year were in the Mzingazi Golf Estate, at R44,000 and R59,000, and R30,000 per month in the suburb of Veld en Vlei.

However, she advised prospective buy-to-let investors to conduct thorough due diligence on the property selection, location, and potential rental income to ensure a sound and appreciating asset.