According to the TPN Rental Monitor Residential Sector Q2 report , residential tenants in good standing have recovered from the 73.50 % at the beginning of the pandemic to 80.34 %, almost at pre-pandemic levels . On the other hand , commercial tenants in good standing have gone from 50.36 % at the beginning of the pandemic to 66.54 %, which is still far below prepandemic levels .
The province with the highest rental good standing is the Western Cape with 84.78 %, followed by the Eastern Cape with 84.15 %, KwaZulu-Natal with 80.08 %, and Gauteng with 78.67 %.
Rental Escalations Although inflation has escalated from the beginning of 2021 , rental escalations have remained low , with an average escalation below 1 % for the entire 2021 , according to the PayProp Rental Index Q2 Report . These rental escalations are significantly lower than in 2019 and 2020 .
The graph below shows the weighted average national rental growth rate ( year-on-year ) versus inflation . Overall , our national rental growth rate seems stable , although under pressure .
So , where does all of this leave you and your property investments ? This is my take on our current property forecast and economic outlook .
Firstly , it ’ s still a buyer ’ s market out there with high supply and lower demand . And people are desperate , so you might just snag a great deal ! And once rentals improve again , and they will , you ’ ll be ahead of the pack .
Secondly , the rental market is recovering with fewer tenants in arrears and increasing rental growth . And when you buy the right types of properties , property prices are still going up .
Thirdly , interest rates are still low , so buying investment property has never been more affordable . Just think , you can pay less servicing debt and enjoy an increased disposable income with more affordable and easier access to home loans !
Lastly , property is still one of the best investments . Your ungeared return on property ( capital growth plus net rental yield ) remains much higher than returns on other investments , including the JSE .
Therefore , I am still a champion of property investment and wholeheartedly believe that although the sector appears cloudy at the moment , there is always an opportunity to make it rain .
SA Real Estate Investor Magazine DEC / JAN 2022 21