Whatshot

2026
2025
November
2024
June
April
2023
March
2022
2021
2020
March
February
2019
December
November
October
September
August
July
June
May
April
March
February
2018
December
November
October
September
August
July
June
May
April
March
February
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013
December
November
October
September
August
July
June
May
April
March
February
January
2012
December
November
October
September
August
July

Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2016-10-14
If you own a residential investment property or are looking to purchase an investment property, then the Tenant Profile Network - FNB Residential Yields Review Report, is of particular interest. This report provides an exceptionally detailed analysis of the South African rental market and provides an excellent national benchmark against which local investment opportunities can be compared to measure their relative attractiveness.

The latest report published last week indicates that the national average yield on investment properties rose slightly to 8,62% in the 2nd quarter of 2016 from the 8,59% measured in the 1st quarter. Our national trend in average gross yield has improved significantly from the low point of 6,67% seen when home prices shot up in the 2006/7 boom period and then increased sharply as home prices adjusted downwards between 2009 and 2011.

By end 2013 and going into 2014 we reached a post recession high in rental yields of 8,79%. As our home buying market loses momentum and home prices retreat the yield starts to improve. The gross yields are before any costs associated with ownership are taken into account. Rode and associates have suggested that as a rule of thumb 1,5% can be deducted from the gross yield to get a quick estimate of net yields for any given property. The proportion of homebuyers currently buying to let is estimated by FNB to be 10,1%. This figure has remained relatively flat since 2011.

The measure of first time buying activity is a statistic that we can expect to impact directly on the rental market. Higher interest rates and tougher economic times are putting the brakes on 1st time buying. As of the 3rd quarter 2016 this is measured as 18%, down from the prior quarters 21% and significantly below the 28% high reached in the 2nd quarter of 2014. This will drive stronger demand in the rental market as this group of buyers decide to rent rather than buy.

Of particular interest for investors is the rental price band analysis which indicates that the best performing tenants are in the R7,000 - R12,000 p.m. rental category with 88,56% in good standing. The next best category is the R3,000 - R7,000 p.m. range with 86,44% in good standing.

The below R3,000 p.m. group have the second lowest rating with 79,75% of tenants in good standing. The worst performing category at 78.11% in good standing is the R25,000 p.m. and higher group, which may surprise some people.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.