Positive signs for residential rentals
Young professionals and couples are sparking optimism in the letting market as the national rent average has ticked up to a higher bracket
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WORDS: STAFF REPORTER | PHOTOS: SUPPLIED AND SHUTTERSTOCK
While residential rental growth figures may have slowed slightly at the end of 2018, the tide appears to be turning this year as young professionals and young couples help provide a more positive outlook for demand.
The PayProp Rental Index Q4 2018 showed the first rental quarterly uptick nationally in two years and also the highest year-on-year growth by quarter for 2018. The index shows that the average national rent at R7,610 reached a higher rental bracket in Q4, moving from the R5,000-R7,500 category to the R7,500-R10,000 slot.
“We are optimistic with regard to return on rentals as there appears to be a small uptick,” says Pam Golding Franchise Services national sales and operations manager Greta Daniels.
In Gauteng, PayProp figures show that in Q4 the average rent breached R8,000 for the first time — 4.84% more than in Q4 2017 and the third-highest growth rate in the country for the quarter. It was also the first increase in quarterly growth in two years, which may signal the beginning of a recovery.
“We have experienced an uptick in rental demand as of the end of Q4 2018,” says Antoinette van Niekerk, Pam Golding Properties Pretoria regional manager. “A lot of young professionals and newlyweds are looking to rent.” She says rentals for townhouses, estates and apartments priced from R7,000 to R18,000 a month are in demand.
In the Johannesburg northern suburbs there is high demand for rentals priced between R6,500 and R16,000 in Fourways areas such as Lonehill, Sunninghill and Douglasdale. “Properties in the R6,500-R16,000 range are popular with young professionals and sometimes students,” says Cindy de Beer, Pam Golding rental manager for Hyde Park and Fourways offices. “There is a lot of activity in the R10,000 to R16,000 bracket, rented by families and young couples.”
In suburbs such as Bryanston, Rivonia, Killarney, Morningside and Woodmead, 70% of rental deals are priced between R10,000 and R35,000, providing a range of properties, says De Beer. Pam Golding Midrand branch manager Nadia Moosa says the rental market is buoyant in Midrand as young people entering the job market find the area affordable compared with other Johannesburg north suburbs.
PayProp data suggests that the average rent in the Western Cape surpassed the R9,000 mark during 2018, making it the most expensive province to rent in with an average price differential of nearly R1,000 compared with the second-most expensive province, KwaZulu-Natal.
The region has had a good start to the year, says Greeff Christie’s International Real Estate rentals manager Mark Burt. “We have seen a very positive 5.87% increase in rental growth during the first two months of this year.”
The Cape Town rental market was hit hard last year, coming off a high base with annual increases of about 10%, says Burt. “We are finding areas such as the City Bowl and surrounds, with affordable sectional title offerings, making up for the lacklustre numbers in the traditional large family home suburbs, which are still under pressure.
“We have seen a marked increase in combined living among younger professionals who haven’t married or started a family yet,” says Burt. “This could be indicative of the high rent-to-income ratio we have in the Western Cape.
“The vacancy rate is still up on last year’s Q4 with rentals above R12,000 most affected and rentals between R7,000 and R12,000 least affected.” Dexter Leite, Pam Golding Properties rental manager for the Western Cape region, says the rental market generally performed well in January/February 2019, buoyed by some new developments in Observatory and the City Bowl. “The seasonal student demand, particularly in the southern suburbs and City Bowl, contributed to the good performance.”
The north coast is shaping up as SA’s investment and lifestyle darling in 2019. Sales director/licensee at Seeff North Coast Tim Johnson says luxury market sales can be an indicator of sentiment. “The uptick in performance of higher-end properties in Simbithi are encouraging and potentially a sign of good things to come in 2019, especially for a number of our emerging lifestyle estates.”
Pam Golding Durban coastal is seeing a trend towards clients opting to rent. Recently developed apartment blocks have increased good rental stock in the Durban North/Umhlanga areas, leading to an uptick in activity.
Johnson says that not only the high-end north coast market has seen movement. “We have also had fantastic results in places such as Sheffield Manor, Manor Estates and Shortens Country Estate, to name a few. Demand is high and well-priced stock doesn’t sit on the market for long.”