- Rentals across South Africa saw their inflation convert to deflation in the 4th quarter of 2020 according to the latest report from specialised property credit bureau, TPN Group.
- On a national average, TPN’s average rental value deflated by -0.75% year-on-year in the 4th quarter of 2020.
- This represents the first quarter of deflation following 13 consecutive quarters of slowing year-on-year inflation in South Africa
- The drop has been caused by rising debt to GDP and South Africans in a weakened financial position together with the highest unemployment rate on record.
Tenant performance remains weakest in the lowest rental value band, i.e. the “Less than R3,000/month” segment, which is populated by the most financially fragile part of the tenant population, with very few financial “buffers” with which to weather any storms that translate into income loss. The middle R7,000-R12,000/month segment remains the relative “sweet spot” from a tenant performance point of view.
The Western Cape tenant population continues to be the best performing of the major 3 provinces (the other 2 being KZN and Gauteng). However, some of the smaller provinces’ tenant populations are outperforming all 3 major provinces. The top 4 performing tenant populations are Northern Cape, with 84.02% of tenants in good standing, Mpumalanga with 82.95%, Eastern Cape with 82.5% and Western Cape at 82.41%.
On a national average basis, TPN’s average rental value moved into deflation to the tune of -0.75% in the 4th quarter of 2020, with the 2 large provincial rental markets, Gauteng and the Western Cape, being the drivers of the national average deflation.
Link to full report: Residential Rental Monitor 2020 Q4
Author: Bryan Groenendaal
