RESIDENTIAL RENTAL VACANCY RATE DECLINES AS CONFIDENCE IMPROVES
BY WALDO MARCUS
A
sharp decline in vacancies points to improved confidence and a residential rental market which is starting to normalise , according to TPN Credit Bureau ’ s Residential Vacancy Survey for the first quarter of 2022 . This is good news for landlords who have been battling consecutive quarters of de-escalation .
CLICK HERE TO SEE THE TPN RESIDENTIAL VACANCY SURVEY
The TPN Market Strength Index is finally back in positive territory at 52.9 points , after an almost threeyear period in negative territory . The index is a measure of market supply and demand of residential rental property . Market equilibrium is reached at 50 points , at which point demand and supply are on an equal footing , indicating the potential for reduced vacancy rates and rental escalations .
Although demand for residential rental property has been waning since 2016 , the pandemic coupled with the other economic shocks has resulted in a depressed Market Strength Index for 11 consecutive quarters from the second quarter of 2019 to the fourth quarter of 2021 . The upward trend in the index ’ s Demand Strength is likely to assist landlords to recover from below inflation escalations that have negatively impacted returns in recent years .
However , while the lower national vacancy has recovered from the double digit vacancy rates seen in 2021 – 13.31 % in the first quarter of 2022 compared to 8.26 % in the first quarter of 2021 – it has yet to return to the pre-pandemic level of 7.47 % achieved in the first quarter of 2020 .
Business confidence has seen a small uptick with the Bureau of Economic Research ’ s Business Confidence Index increasing from 43 in the last quarter of 2021 to 46 in the first quarter of 2022 .
SA Real Estate Investor Magazine APRIL 2022 87