The numbers are exploding and not all in the right direction, says credit bureau TPN, which notes in its Vacancy Survey 2020 for the fourth quarter that one in five rental properties in Sandton and Cape Town’s Atlantic Seaboard are standing empty.
Vacancies are generally high in both the low and top end of the market, with the former as high as 16% for rentals below the R4 500 a month range. One in five rentals in the price range above R25 000 a month is unoccupied.
Overall, vacancies in South Africa have rocketed to 12.91%, up from 8.97% in the fourth quarter (Q4) of 2019, meaning more than one in 10 rental properties are vacant. Finding the “right” tenant has become increasingly difficult, as price is not the only factor to consider as tenants weigh up affordability, maintenance, security and rising municipal expenses.
With more than 3.7 million households renting in the country, this market has seen massive growth of 33% over the past decade. But landlords are seeing more vacancies as Covid-19 has decimated the job market and tenants are forced out of the rental market – many of whom have been forced to move back with family.
Noting the latest Stats SA General Household Survey released in December 2020, TPN says two million households rent a house, flat, cluster, townhouse or semi-detached dwelling; just under a million households rent backyard accommodation such as cottages, staff quarters or other housing, while 762 000 households rent traditional or informal dwellings such as shacks.
It said demand bottomed out in Q3, but there were signs of recovery in the previous quarter, which was a positive in the right direction.
Vacancy rates in the regions are starting to show some recovery though, most notably in the Western Cape, Eastern Cape and KwaZulu-Natal, but Gauteng continues to slide with 14.66% vacancies in Q4.
The flat construction sector has not helped: TPN, citing the latest Building Statistics, noted a booming building sector in Gauteng – which saw 25 513 residential houses and flats completed in 2019 – added to the glut in rental supply. 2020 was a tough year for construction, with only 7 907 residential units completed from January to October.
With almost half of the country’s rental market based in Gauteng, the province also saw high vacancy rates. Sandton had the highest vacancy rate of 22.4%, which was down 4% quarter-on-quarter, while Soweto dropped 18.6% – which was likely due to the fact its tenants are generally lower income earners and casual workers most affected by job losses and pay cuts. Ekurhuleni’s vacancies stood at 9.8%.
In the Western Cape, the residential construction sector was flat, but there is some consistent new development. Its vacancy rate is 9%, with more affordable northern suburbs properties at just 5.1%.
The building sectors in KwaZulu-Natal and the Eastern Cape were particularly weak, with just 1 563 and 488 new builds in the first 10 months of 2020.
Overall KwaZulu-Natal vacancies are at 7.9%, with eThekwini at 4.2% and the luxury North Coast only 7.4% vacant – but only 73.55% of KZN tenants are in good standing.