Low interest rates are seeing tenants become homeowners and putting landlords under pressure.
Covid-19 has turned the property market on its head, with the trend shifting towards buying, because of low interest rates, rather than renting, leaving landlords out in the cold. First National Bank’s September property barometer“This is reflected in the stabilising flat vacancy rates and declining rental inflation. These shifts played a vital role in supporting home-buying activity in 2020 and into 2021, mostly in middle-priced segments,” the FNB report said.
A swathe of interest rate cuts in 2020 as the South African Reserve Bank tried to mitigate the impact of the Covid-19 pandemic on the economy have been a major contributor to the growth of the property market, making property investment more feasible, especially for first-time home buyers. Khumalo said in some instances, tenants were downgrading or moving home to live with parents because of unemployment.found that 54% of respondents believed current home-buying rates were affecting the rental market in a negative way.
In agreement, Dawie Roodt, the chief economist at Efficient Group, said the trend towards house purchases would “mostly be neutralised by falling income”.