Finance minister Enoch Godongwana delivered his maiden budget speech this week with few surprises, notes TPN Credit Bureau. But what impact will it have on the rental market, amid an interest rate hike cycle?
Godongwana did concede that the state cannot plan for permanent expenditure on the basis of short-term increases in commodity prices. “Although the number of residential tenants in good standing improved from 77.6% in the fourth quarter of 2020 to 81.4% in the fourth quarter of 2021, this is still short of the 81.88% recorded in the fourth quarter of 2019, prior to the onset of the pandemic in South Africa,” said Marcus.
Gauteng commercial tenants recorded the weakest rental collections in the sector with only 66.73% in good standing for the last quarter of 2021, while the Western Cape recorded the best performing commercial tenants with 77.31% in good standing with their landlords, he said. “What these figures reveal is that some provinces require more stimulus than others,” said Marcus.South Africa’s Reserve Bank continued with its rate hike cycle in January, which will have an impact on the housing sector.
After a small recent hike following a long period of low rates, South African rates are also widely expected to be increased in small increments this year and beyond, said Smuts.Does the same inverse relationship exist between the repo rate and rental price growth, whereby higher rates will put downward pressure on rental inflation?