Will migration reshape residential rental markets in 2024?

South Africans have been on the move in recent months, say property experts – with major impacts on local real estate markets in Gauteng and the Western Cape especially.

Rory O’Hagan, principal of Chas Everitt Hyde Park and Sandton, reports a spike in interest from returning expats, a lot of them after being away for many years.

According to O’Hagan, many cite the rising cost of living abroad, the relative affordability of property in SA, as well as the South African weather and lifestyle. And while the Western Cape isn’t the only province experiencing increased demand, it’s been a popular pick.

Some analysts argue that settled ‘semigration’ trends between provinces are now reversing, increasing demand in economic centres like Gauteng at the expense of more rural and coastal markets. O’Hagan says many of those who moved to the Western Cape from Gauteng during and after the pandemic are being summoned back to the office. (It should be noted that Gauteng is itself a beneficiary of migrant labour, both from neighbouring countries and less affluent provinces.)

But the impact of any reversal in migration patterns is the subject of some dispute. Sotheby’s International Realty reported 22% growth in the Western Cape’s residential sector in 2023, with coastal areas performing especially well. The Rode Report for 2024 reports the same finding for the Cape, adding that it enjoys below-average vacancy rates.

What does PayProp’s rental market data show?

The final PayProp Rental Index for 2023, covering Q3, showed close-to-average rental growth in both the Western Cape and Gauteng, suggesting these trends have not had a significant overall impact. Growth accelerated sharply in the Cape in Q3 compared to Q2, but at 4.3% it was still below the national average of 4.6%. For its part, Gauteng posted just-above-average rental growth (4.7%). If people are returning to the province in large numbers, the impact on rental prices has yet to show up in its total growth.

Future issues of the Rental Index will show which of South Africa’s provinces experience the fastest rental growth going into 2024, while also reporting on national growth statistics, arrears, tenant credit metrics and more.

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