Tenants can expect to dig deeper into their pockets over the next 12 to 18 months with rentals on the rise and a shortage of rental stock developing in many areas.
This is particularly true in the gated communities and sectional title complexes. The strongest demand in Pretoria is for two-bedroom units around the R5 000 to R5 500 a month and below bracket and insufficient stock is providing further support for rental growth.
This is the opinion of Andrew Schaefer MD at Trafalgar Property. Schaefer predicted that the return to prerecession rental increase levels of around 10% last year will continue. “The rise in demand is being driven by a number of factors” he said.
He supports the view that as SA’s population gets younger, it is increasingly joining the mindset of the Europeans, which is towards flexibility and liquidity enabling them to travel and follow job opportunities rather than be tied down by mortgages.
“In a few cases we are witnessing younger people renting in the more expensive trendy areas and buying in areas where they can afford as an investment.”
Trafalgar’s managed rental pool of around 8 000 units across SA bears this out with areas such as Westrand, Midrand, Pretoria West and Illovo in Gauteng and Berea in KZN receiving the highest level of enquiries.
Research has further backed this by the fact that the age of the first-time homebuyer has risen.
“Generally, however, the shortage of affordable houses to buy is a definite driver for the rental market,” commented Schaefer. “Current low interest rates and the move of mortgage lenders, like SA Home Loans into the sector, will have a positive impact on affordability. However, as prices inevitably rise, the pressure on rentals will continue and is here to stay.”
Article published in the Rekord (Pretoria Moot) – 31 May 2013