 My name is Yehid Smats. I'm the Head of Data Analytics at PayProp, and I'm also the author of the quarterly rental index. Tonight, I'm going to take you through the latest PayProp rental statistics up to the end of September. I'm gonna talk to you a bit about how the economy is currently impacting tenants. And I also wanna talk you through steps that you can take to ensure the health of your rental work in this current tough economy. So let's start with the trends that we've been seeing in the rental market. I can just share there, there we go. Now, as much as we all wanna put the pandemic behind us, it had repercussions, unfortunately, on most industries, including the rental market, which you can see here on the graph. Just after lockdown was announced, this was the last quarter of pre-lockdown life, rental growth literally halved within a quarter. And that was, if you think back at the time, that there was a lot of uncertainty about whether tenants are gonna have a job, many people had to take a reduction in income. So it makes sense that there was an immediate effect. Unfortunately, as you can see here, that kind of spilled over into 2020, and there was very low rental growth throughout last year. Now, the pandemic wasn't the only contributor to this. There are other contributors to this as well. One of them is that with the lower interest rates that we experienced at the beginning of lockdown, tenants who were financially able to bought their own properties. So they left the rental market permanently, and there was a bit of a lower demand for properties due to that. If we look at a stat from PayProp's annual survey last year, we'll see exactly that here are the results. So we'll see both sides of the coin here. The question was, why are tenants moving? 65% of respondents said that they're moving because they're buying their own properties. So those are the tenants who are financially able to. But 58% also said that tenants were moving because they're looking for a smaller and presumably more affordable home. The third reason that we see here is that tenants are looking for a home with office space, which also intuitively makes sense, right? Because the pandemic kind of changed the way we work, and many companies became more flexible with their work environments. Luckily, as we just saw, there are, let me go back there, there are signs of recovery in the rental market with rental growth increasing during the most recent quarter. This was the one up to September of that increase was 2.9%. That is far, often far better than what we saw last year this time when rental growth was only 0.2%. However, if we plot the rental growth versus inflation, the picture is a bit less rosy. And the reason I say that your commission income as an agent increases with the rental growth rate, right? But your costs are most likely closely, more closely linked to inflation. Inflation during the last quarter came in at 7.8%, 7.6%, and September is not out that 7.6% is a forecast, but that is over 4% higher than the rental growth. So from a business perspective, if your commission income is growing at 3 and your costs are growing at 7, there is a bit of a mismatch and you are losing some of your purchasing power of that income that you have. You can also see on this graph that the gap between inflation and rental growth is increasing, and it hasn't always been this way, believe it or not, not too many years ago, rental growth actually outperformed inflation by quite a bit. There are, of course, other factors affecting rental trends, right? The activity of industries within each province, for example, so mining. But if we look at a provincial graph and provincial growth rates, we'll see that some areas are performing way above average. In the Northern Cape, you'll see rental growth in the last quarter came in at 8.1 versus the national of 2.9, but these obviously also the underperformers, the free state unfortunately in the most recent, quarters saw negative rental growth of 0.2%. Another factor affecting the growth rates in certain areas is immigration that's continuing. Many people are moving to coastal towns or different provinces, firstly because they have the flexibility to do so with this new way of work, but the pandemic also made people rethink their priorities and more people are realizing the importance of balance in their lives. And coastal and smaller towns offer the best of both worlds. All you need to do your work these days is a stable internet connection, right? So those immigration trends also affect rental growth and of course the supply of properties within those areas that are high in demand. So if we look at the provincial breakdown, you'll see that apart from the rental growth that varies, so does the average rent. And that is also because of many things. The high demand obviously, but some provinces are just more expensive than others. As you'll see here, the Western Cape continues to be the most expensive province and the Northwest, where there are a lot of student rentals on paper books that will affect the statistic is currently the lowest. As I'll point out again later, knowing what is happening in your area and your province is really key to delivering great service. And this is where resource such as the paper of rental index comes in quite handy. So where do we go from here? As much as I want to be optimistic about the rebound that we're seeing, it is difficult if not impossible to predict what the rental market will look like in a year's time. And the reason for that is that there is just currently so much uncertainty in the world. And in our globally connected world, what happens in other countries also affects us. Just last week, Business Insider published an article in which six experts said that markets are at a breaking point. And that really shouldn't come as a surprise. If we look at various markets and economies around the world, we rarely see any good news. Most notably large global countries like the U.S. and the U.K. and even South Africa are experiencing abnormally high levels of inflation. The U.S. has the highest inflation that they've had in decades. And this is, of course, driven by many things. One of them being the rise in input prices such as oil and gas, which has become much more expensive since Russia's invasion of Ukraine earlier this year. Food prices are also affected because Ukraine, for example, is usually a large exporter of grains, barley, wheat, corn, and they aren't able to export at the moment. Further to that, I don't want to be the bearer of bad news, but I just want to cover the most important drivers. The supply chain gridlock that was experienced and has kind of eased up a bit now also contributed to inflation because it limited supply of many of the goods that people purchase, and that, of course, pushes up the price. And South Africa, as you know, we also further have to deal with ESCOM's inability to supply steady electricity, and that unfortunately costs the economy millions and billions of rand. And also unfortunately increases the chances of our economy going into recession. In the most recent quarter, I don't know if you've seen, but economic growth was only 0.2% year on year. There are also indicators pointing to a possible global recession on the back of all that is going on in the world. So consumers in South Africa are currently facing a bit of a trouble blow if I can call it that between inflation, rising interest rate, and very slow economic growth. As I've mentioned, inflation is above 7%, although I think we all know that not everyone's cost of living increases by 7%. If you have private medical and school fees and all of that, your inflation is most likely a bit higher. So to combat inflation and to protect the currency, the Reserve Bank has been forced to raise interest rates. Unfortunately, you haven't seen the impact of that on inflation. Inflation continues to be high, but high interest rate, which effectively raises the cost of money, further hurts economic growth. So while there is a reason for the interest rates going up to combat that inflation, it negatively affects economic growth. So that is a bit of a double-edged sword. Stagflation is a term used to describe exactly such a phenomenon. It's a period of high inflation and stagnant economic growth, and it's currently experienced in many countries in the world. If you look at it, I want to show you an interesting stack. If you look at global Google searches for the word stackflation over the past five years, it looks like this. You'll see that there was quite a spike in the last year or so. So people are becoming more aware of this term, and I think they feel it more as well. If you want to see a breakdown of, a regional breakdown of where people search for it the most, you can go to Google Trends and play around with it if you want. So how is all of this affecting tenants? So if we look at a tenant's income basket in a monthly salary, they have debt repayments and other monthly obligations. They have a rent component, and then they have disposable income that covers everything else from groceries to school fees to entertainment and all of that. Inflation affects this disposable income basket and this debt basket to a certain extent as well. Rising interest rates affect the debt basket as well, and the fact that economic growth is slow means that the income, the total basket, grows at a much slower pace. So basically the only place that there is a bit of give is the rent, because you can only cut out so many of your expenses, and then you're down to necessities only, and that's where you're spending your money. And you can only increase, you can only limit your debt so much. Most people have a car that they have to pay or for credit card, or so there is some control. I want to say that a tenant can exercise on this basket, but really only so much. So the fact that the only unaffected basket is the rent basket really shows that tenants don't have the ability to afford higher and higher price increases. So that goes back to the data I showed earlier, tenants are moving to smaller properties just because they don't have anywhere that they can be squeezed anymore. So what does this mean for you as a rental agent? What can you do to ensure the health of your rental book? So firstly, and this might be a bit obvious, but vet your tenants. We just saw earlier that many tenants bought their own properties during the pandemic or when interest rates were lower. So those good tenants have left the market permanently. So the importance of vetting your tenants properly, I don't think I really can overstate it, but make sure that you don't only look at a credit check. If you can look at a credit check that combines credit data with rental data, Pay Props Tenant Assessment Report does exactly that. Then phone the references that a tenant or an applicant provides. Have a look at their bank statement or their salary and let those things guide you to ask questions. So for example, if someone had unsecured short-term loan two years ago, maybe ask the question instead of just throwing out the application just because you saw something on the credit check that you didn't like. Next up, control tenant arrears. With tenants being financially squeezed, it is more likely that they might miss a rent payment or do a partial payment just because they don't have the finances to cover that in a particular month. Also remember that tenants are also human. So have a conversation with them if you can. But I think the important thing is controlling tenant arrears, knowing why a tenant is in arrears and getting on top of that as soon as you practically can. I think it's very easy to say, oh, you know, let's see if he pays next month. But the larger that that outstanding amount becomes, the less likely you are to collect that rent. The other thing from a business perspective is, if that tenant doesn't pay his rent, then you don't earn your commission. So that will then in turn affect your cash flow. So controlling tenant arrears is quite important. Then moving on to number three, use Propdeck that saves you time. Make sure that you spend your time doing the activities that add value to your rental book, to your landlord's lives and to your tenant's lives. Sending invoices, growing up manual statements, making manual payments, reconciling by hand. These things don't add value, but they have to get done. If you use the right Propdeck in this situation, that can automate all of these things, that will give you the time to do the people things, to build relationships, to spend time on maintenance, and whatever you want to do in your rental book that adds value, that gives you time to do those things. Number four, use Propdeck that is secure. So during tough economic times, and unfortunately we've seen this at Payproc as well, fraud and cybercrime increases. Internal fraud as well. And that's why a program or software like Payproc allows you to set permissions, to control who can do what, and also gives you something like the audit log that you can literally track every single action that anyone with access to your portfolio did during a specific time. So make sure that you protect yourselves, that you protect your landlords, and that you protect your rental book by using Propdeck that is secure. Fifth, offer great services to landlords. What we've seen in the beginning of the pandemic, and that's also one of the survey results, was that quite a large proportion of agents cut their commission, the commission percentage that they charge just to keep a landlord. So while it's very easy to say, Mr. Landlord, please don't go, I'm going to lower my commission percentage to 7% instead of 9%, it's very difficult to have the reverse of that conversation. You can't just go, Mr. Landlord, I'm going back to 9% from 7%. So cutting your commission is never advisable just because that reverse is so difficult. But instead, what you can do is approach the situation and increase the value that you add to your landlord's life. So back to value-adding activities. So at PayPal, we have an owner app, for example, which is a live real-time app where the landlord can just look at his portfolio, his properties, and see the damage deposit that the tenant holds. Just that transparency is another value-add to your landlord's. Something else that we have at PayPal is a property account. To me, I always say it's a no-brainer, it's really just a kitty for a landlord where you can keep additional funds so you don't have to go to your landlord on the 20th of the month when he also doesn't have any money anymore and I say I need 2,000 grand for a burst geyser. So little steps like that, and I'm sure you can think of many more examples, little steps like that, that increases the value that you add to your landlord's lives, really can protect your rental book and your portfolio, especially during tough times. And then lastly, I know I mentioned earlier, know your market. It might feel like an obvious one, but you'll be surprised at how many agents don't pay attention to what's going on around them. But knowing the market that you operate in can help you manage expectations. It can help you increase the value that you add to both your landlords and your tenants. For example, if you market a property that is too expensive, that will stay vacant and that will cost the landlord money. So knowing your market, knowing the right price to charge for a property, not underpricing that property as well, it really is important for you to distinguish yourself as a good agent. Good tools that you can use at Paycropt with Art, we put out a quarterly Paycropt rental index that you can subscribe to on our website. And we also do an annual State of the Rental Market server, which I took a status to from already. But these are just tools. They're publicly available to you and they just help you to be a better agent. So I want to invite you to subscribe. And when you read the rental index, look at the stats and think, how does this affect me? What insights can I take and what actions can I take to improve my rental book? And that really is that from me. If you have any questions or any comments, feel free to reach out to me. Let me know what you feel. And if you want anyone to reach out to you to show you a bit more about Paycropt, you can also reach out to me and I'll get the right people to contact you.