Are South Africa’s tenants about to leave the rental market and enter the buyers’ market?
Homebuyer confidence was at 77% in Q4 2024 according to Absa’s Homeowner Sentiment Index for Q4 2024, the highest level since Q1 2022 and 4% above the previous quarter. An equal percentage of non-homeowners felt that now is an appropriate time to buy.
While affordability has been a barrier for first-time buyers, Absa reports that many respondents had saved enough for a deposit.
Could this be the year that tenants leave the market in massive numbers? Not necessarily. High prevailing interest rates mean high ongoing costs. Buyers will also need healthy incomes to manage hefty monthly repayments.
Absa reports that much of the confidence stems from existing homeowners’ desire to move. Additionally, a substantial minority of tenants deem renting more flexible and easier than owning.
Growing confidence, growing investment
Other findings in the Homeowner Sentiment Index suggest that buy-to-let investment could pick up this year.
The percentage of respondents who believe it’s a good time to invest in South African property rose to 85%, the highest ever recorded in Absa’s Index.
The share who invest may be smaller. In PayProp’s latest State of the Rental Industry report, just 14.6% of respondents said that the landlords they work with are growing their portfolios. However, it is the highest percentage ever recorded in a PayProp survey.
Any increase in rental supply would come as welcome news to rental agents. Signing more landlords was the top priority for 60.4% of the property professionals who answered our latest State of the Rental Industry Survey, and yet agents also said that portfolio growth and landlord retention are key challenges for their businesses. Bringing more supply online could reduce the pressure on agencies.
