The survey conducted in 2022 indicated that most tenants across all ages rent because they simply cannot afford to buy, with 54% rating affordability as the number one reason for not purchasing a property.<\/p>\n
The survey also showed that tenants aged 18 to 29 listed the flexibility to move as their second most significant reason, while those aged 40 to 49 listed having a bad credit score as their biggest reason after affordability.<\/p>\n
The credit bureau pointed to rising interest rates and stagnant salaries as the main reason many South Africans could not afford to buy property.<\/p>\n In January 2023, the South African Reserve Bank (SARB) announced a 25 basis point hike, taking the current prime lending rate to 10.75% \u2013\u00a0the ninth rate hike since the current hike cycle started in November 2021, totalling 375 basis points over the period.<\/p>\n This puts property ownership out of reach for many South Africans, especially those looking to become first-time homeowners.<\/p>\n Kicking prospective homeowners while they’re down is that salaries are not keeping up with the heightened inflation experienced in South Africa over the past couple of years.<\/p>\n According to global solutions company WTW’s Salary Budget Planning Report<\/a> at the start of 2023, employers across the country aim for salary hikes averaging a 6.1% increase for this year \u2013 slightly higher than the 5.9% average boost in the pay budget given in 2022.<\/p>\n Despite the slightly higher pay budget, this comes in lower than average annual consumer price inflation for 2022, recorded at 6.9%.<\/p>\n While inflation is expected to decrease marginally in 2023, salaries will ultimately remain stagnant.<\/p>\n “Unfortunately, the current state of South Africa means the financial outlook for companies is generally bleak, and this will have a direct impact on their ability to offer any kind of meaningful increases to employees,” said EXCO member and Master Reward Specialist Dr Mark Bussin.<\/p>\n With ever-rising interest rates and stagnant salaries, more and more consumers inevitably turn to rental properties than home ownership in uncertain economic times, said TPN.<\/p>\n This trend is evident as the residential rental Market Strength Index remains positive at 56.47 as demand outstrips supply.<\/p>\n While the vacancy rate of 8.13% represents a quarterly increase of 1,2% compared to the 6.92% in Q3 2022, TPN said the increase in vacancies resulted from delayed supply and inventory coming onto the market over the quarter.<\/p>\n The demand rating increased from 67.24 points in Q3 2022 to 71.38 in Q4 2022. At the same time, the supply rating also showed a marginal uptick from 57.53 in Q3 2022 to 58.47 in the fourth quarter – showing demand is sitting over 20 points higher than available supply in the country.<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2023\/03\/reasons-to-rent.png\")
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