#CENTURION REAL ESTATE FULL#

The worst performing category of tenants were those paying less than R3 000 per month with only 68.10% in good standing. The number of tenants in good standing dropped from 81.4% in Q4 of 2021 to 80.78% in Q1 2022.

#CENTURION REAL ESTATE FULL#

Landlords need to be aware that getting rental payments in on time is likely to be a challenge going forward as inflation continues to place consumers under pressure and landlords are forced to escalate rentals.įinancial pressure reflects the fact that the number of tenants in good standing, those that have paid their rental account in full for the month, have started to drop. New property investors are competing with higher house price inflation with striking a balance between occupancy, and achieving a decent yield, becoming harder to achieve. Rental escalations during Q1 2022 were at 1.93% which is expected to increase as inflation forces landlords to try and ‘tread water’ with escalating costs. Fuelled by spiking inflation, SARB embarked on a series of interest rate increases. Rising fuel and food prices combined to push inflation to 5.9% during March 2022. Vacancies are expected to decrease further to below 8% by the end of Q2 as consumers continue to face financial pressure. Weak demand for residential rental stock, on the other hand, pushes vacancy levels to record highs. Unemployment figures are a key economic indicator when it comes to residential rental stock i.e., the more people that are employed, the higher the demand for formal rental stock. Increased demand for residential rental stock in Q1 was the result of low rental escalations which were further supported by slightly improved employment figures. TPN’s Market Strength Index, which is based on the perceptions and experiences of estate agents and landlords in the residential rental market, recovered to 52.8% in Q1 2022. Demand for residential properties saw recovery during Q1 2022 with the market’s vacancy rate recuperating to 8.26%, compared to 13.31% a year earlier, according to TPN Credit Bureau’s Residential Rental Monitor.

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