Tenant demand for a rental property in the third quarter of 2021 remains weak. Low demand is perhaps not surprising considering that the hard lockdown in the second quarter of 2020 wiped out 14 percent of all jobs.

According to to.Property24.com,even after some subsequent initial job recovery, the unemployment situation remains concerning at 34.4 percent meaning 1.4 million pre-pandemic jobs have been lost.

The Chief Executive Officer of TPN Credit Bureau Michelle Dickens, says that the unemployment rate deteriorated again in the third quarter of 2021 with an additional 375 000 more jobs lost in the formal sector.

Exacerbating the challenge of high rates of unemployment are increased housing costs, water, gas and other fuels which account for 15.9 percent of household expenditure, with transport accounting for another 15.6percent . Combined, these factors are a powerful incentive driving tenant behaviour towards cost savings such as downscaling, cohabiting or moving in with friends and family.

According to the index, demand for rental property in the third quarter of 2021 is only slightly higher than average at 56. Rental property supply, however, remains at pre-pandemic highs with a rating of 67. Weak tenant demand coupled with supply highs translates into a Market Strength Index of 44 which, in short, translates to an over-supplied residential rental market.

An over-supplied rental market with weak tenant demand has played out in high vacancy rates. Encouragingly, vacancy rates may have peaked given that they have dipped to 10.66 percent in the third quarter, trending downward from 13.15 percent in the previous quarter.