Whatshot

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 - Good News For Landlords

Property Talk - Good News For Landlords

Author: Andreas Wassenaar
Date: 2023-10-26

DoI Rent or Buy? This is a common debate and there are periods in the propertymarket cycle when it does make sense to rent rather than buy. It is alwaysgoing to be cheaper to rent than buy.

Forthe same monthly budget, you would be able to secure and live in, for a period,a larger and more lavish home than a purchase. However, you will not bebuilding wealth, you will not be able to enjoy the benefits of a growingproperty market and pricing or be able to improve a property in the same way asownership tends to encourage.

Attimes when home prices are stagnant or even decreasing, it does make perfectsense to rent rather than buy. For a period during 2020 and 2021, Landlordscame under severe pressure from rising costs associated with ownership anddecreasing rentals, putting the squeeze on their yield.

ThePayprop Q2 Rental Index Report provides an excellent analysis of the overallSouth African rental market and helps us understand where we are in the cycleand the rental escalations that are evident.

Thegood news for Landlords is that quarterly rental growth has bounced back withthe first two quarters of 2023 showing aggregate growth rates of 4,2% and 4,4%.Tenants who may have gotten used to negotiating rentals lower will be surprisedthis year how rentals will quickly firm up and start to move upwards.

Ifwe analyze the gap between inflation and rental rate growth over the past fewyears, that wide gap has started to narrow quickly as inflation around 5% isnow only marginally higher than the current weighted average national rentalgrowth rate of 4.2%.

Acrossall nine provinces rental growth rate has been positive. The Western Cape isstill South Africa's most expensive province to rent with an average rental rateof R9,730, although growth is at 2.8%.

TheNorthern Cape growth is currently at 6.8% and the average rental rate of R9,216- just behind the Western Cape. KZN recorded a growth rate of 4,4% and is SouthAfrica's third most expensive province for renters with an average monthly rentof R8,817.

Gautengis just behind with an average rent of R8,691. The national percentage oftenants in arrears ticked up to 18.4% but below the peak of 24.9% experiencedduring Covid in Q2 of 2020.

Asa province, KZN has a higher average tenant in arrears at 21% than most. FreeState (25.2%) and North West (25%) are more delinquent on average than KZN butthe Western Cape has the lowest at 14.4% of tenants in arrears.

Withinour immediate Ballito rental market, we have an over-supply of stock within theR12,000 to R15,000 p.m. bracket with the two mega-projects of Ballito Hills andBallito Village accounting for this surge of new properties to the market.

Newis always preferred to older and this does limit the current rental growth ofolder stock in this price bracket. The highest rentals achieved within ourDolphin Coast market have been done by Seeff Zimbali at R125,000 p.m.