Despite this improved business confidence , slow economic growth , high rates of unemployment and financially constrained households continues to be a challenge in the property sector , slowing down the recovery .
From a provincial perspective , the vacancy rate is mixed with the continued growth in supply of rental housing in some provinces limiting a return to pre-pandemic vacancy levels . In Gauteng , a surplus of additional rental housing stock is slowing the province ’ s vacancy rate recovery . According to Stats SA , the formal rental housing market increased in Gauteng from 40 % to 48 % in 2020 . The province is home to nearly half of all tenants in South Africa .
Gauteng ’ s vacancy rate peaked at 14.66 % in the fourth quarter of 2020 . It has since recovered from this high , hovering slightly above the national average vacancy rate of 8.26 % at 8.69 %. The province ’ s slower rate of recovery is being exacerbated by a higher rate of office buildings being converted into rental housing accommodation as commercial real estate remains under pressure .
On the up side , however , negative rental escalations that have been a trend in the province for the past five consecutive quarters are back in positive territory .
In the Western Cape , tenant demand continues its positive trajectory and is reverting back to the historically-low vacancy levels last seen in 2016 and 2017 . The vacancy rate in the Western Cape peaked at 14.38 % in the second quarter of 2021 , recovering to 2.9 % in the first quarter of 2022 .
The percentage of rental properties relative to the percentage of total households is stable at 38 %, indicating an increase in owner occupied properties .
Rental escalations have been under pressure in the Western Cape since 2019 . It was one of only two provinces that experienced de-escalation for more than four consecutive quarters from the third quarter of 2020 to the second quarter of 2021 . Encouragingly , rental escalations are back in positive territory in 2022 .
KwaZulu-Natal bucks the declining vacancy rate trend with a sharp increase in vacancies in the first quarter of 2022 to 13.26 % from 9.34 % in the last quarter of 2021 , likely the result of the continued impact of the July 2021 civil unrest and riots which resulted in higher unemployment and the closure of some businesses in the province . Prior to the pandemic KwaZulu-Natal had a lower vacancy rate compared to the national average .
88 APRIL 2022 SA Real Estate Investor Magazine