RENTAL GROWTH STRONG ON ATLANTIC SEABOARD
Category Property News
Following the trend in the property sales market, there is a lack of stock in the rental market in the upper price bracket, which is resulting in landlords being able to achieve higher market rental prices, says Michael Bauer, managing director of IHPC estate agency.
The latest TPN report (Q4 of 2014) indicates that the Western Cape rental market is very strong, with 89% of tenants being in good standing, 79% of the tenant total paying their rent on time and only 10% paying their rent after the due date.
What is interesting to see, said Bauer, is the change of payment behaviour in some rental brackets, particularly on the Atlantic Seaboard and the City Bowl, where yearly rentals sometimes are being paid in full upfront. These are not necessarily corporate tenants, and this tenant mix is from Gauteng, others from the UK and other European Countries. The rentals being achieved are between R35 000 and R40 000.
The shortage of properties to rent could be attributable to certain trends changing and there are many more people renting rather than buying. With renting a home, most tenants tend to get more house for their monthly payments in comparison to paying off a bond, and there is the added convenience of not being responsible for the full maintenance and upkeep of the property (which would be the case if it was owned). The last reason for the lack of stock is that, because there is a lack of stock for sale, there are more people still needing or wanting to move, and so will rent for a time while they look for a home to buy, said Bauer.
In turn, he said, those who would have sold to either downscale or upscale are holding onto their properties because they cannot find suitable homes to move to, which is exacerbating the stock shortage, and creating a “catch 22” situation. In the past, people tended to move every five to seven years, this period has now changed to twelve years, which slows down the property cycle.
“It seems the rental shortage problem will be with us for a while to come, and landlords, understandably, will take this opportunity to make money on their properties. The undersupply of stock in all rental brackets will push prices up, but this cycle does need to be stopped or slowed if the market is to remain healthy,” said Bauer.
View rental properties in the Atlantice Sea Board and City Bowl
Author: IHPC
