WORDS: DEBBIE LOOTS AND SUPPLIED :: PHOTOS: SUPPLIED
The high interest rate and economic constraints are only some of the reasons more people are choosing to rent rather than buying a home.
It’s no surprise that rentals are reigning in the property sector right now – across all price bands. From entry-level to premium sectional title units and freestanding homes, landlords in SA are smiling. And so are rental agents.
The Eastern Cape is no exception. According to Pam Golding Properties area principal in Gqeberha Justin Kreusch the market there has been pretty resilient, having bounced back from the the pandemic’s hard knock.
“We have seen demand across all sectors and price ranges,” he says. “The most popular are homes between R8,000 and R15,000 per month, which will get you a two- or three-bedroom sectional title unit or freestanding house. In the top end of the market we have just concluded a R30,000 per month rental for a beachfront apartment.”
Neighbouring East London is also seeing a surge in rental demand, albeit for different reasons. East London has stock of older holiday homes on the east coast, which some owners are renting out instead of using as weekend or holiday accommodation.
“People are also choosing less expensive rentals outside town even if it means a slightly longer commute to work,” says Pam Golding Properties area principal in East London Sean Coetzee.
Those who bought property just after Covid, when the interest rates were lower, are renting out their homes instead of selling and finding themselves somewhere less expensive to rent.
Pam Golding Properties has this four-bedroom townhouse in Umhlanga to rent at R65,000 per month
VIBRANT JOBURG
Regional Head in Gauteng for Pam Golding Properties Nelson Ferreira says they are processing a lot more applications from tenants than last year. “The demand for rentals is high and if we have stock in the R6,000 to R12,000 per month range, they go fast. There is also a lot of activity in the R15,000 to R18,000 price band and all the way up to high-end luxury homes.”
Real Estate agency Tyson Properties says their Johannesburg rental bookings grew by a 100% in six months. “Current economic constraints are impacting first-time buyers and middle market buyers, making it difficult to enter and remain in the property market,” says chairperson of Tyson Properties Chris Tyson.
“Many are choosing to rent while they ride out this period of uncertainty.” Tyson Properties’ Johannesburg director Francois du Toit agrees, saying that, for now, there are a relatively large number of rentals available with secure complexes being the most popular. Moreover, when it comes to location, all areas within greater Johannesburg are showing growth.
TPN Credit Bureau data obtained by Tyson Properties reflects the positive approach to rentals. The second quarter of 2022 shows tenants are paying their rent even though they may be strapped for cash. The number of regular rent-paying tenants increased from 80.78% in the first quarter to 82.22% in the second quarter. The trend is expected to continue throughout 2023.
Seeff Randburg Rentals’ John O’Reilly says since January the demand for rentals here increased monthly by between 10% and 20%. Affordability is a big driver with the R7,000 to R14,000 per month range the most active.
In the Linden and Randpark Ridge areas, for example, a one-bedroomed unit goes for between R5,500 and R7,500 per month and a three-bedroomed home between R9,000 and R14,000.
A three-bedroom cluster in Lonehill rents for R26,000 per month by Tyson Properties
BEST INVESTMENT
Tyson Properties rental agent in Johannesburg Sharon Kayise says the high rental demand makes for a good investor buyer market. She advises would-be investors to focus on properties priced up to R1.5m. “The lower the price, the better the return,” she says. “There are more tenants in this price range and it is easier to sell this sort of home later.”
In Cape Town, Seeff Southern Suburbs rental manager Andrew Collins says excellent rental yields are on offer now for buy-to-let investors in new developments such as The Hub in Woodstock. It has vetted tenants and yields are about 7%. Alphen Glen, a luxury development on the border of Constantia, also offers excellent rental yields of 6.8%-9% on a one-bedroomed unit.
Collins says rental demand in Cape Town is particularly high. “There is a stock shortage in all areas from Woodstock to the southern suburbs as well as in Hout Bay and Llandudno.”
CAPE TOWN’S ROCKING THE RENTALS
Licensee for Seeff Atlantic Seaboard and City Bowl Ross Levin says there has been a tremendous increase in the demand for rentals in Cape Town due to people wanting to rent before they buy, from Johannesburg and the Durban area.
However, semigration is not the only reason rental demand is skyrocketing here: Levin says factors such as an increase in tourism, people returning to the office, and college and university students needing accommodation also play major roles.
“Where rentals in the price bracket of R25,000 to R35,000 per month were previously popular, we are now experiencing greater interest in higher end rentals ranging from R80,000 upwards,” he says.
According to Levin rental yields across the Atlantic Seaboard and City Bowl are around the 4%-6% mark. Pam Golding Properties Rentals Manager for Cape Metro Arno de Wit agrees, saying semigration is a key driver of the high rental demand here.
“Proactive governance in finding real solutions to load-shedding, better service delivery and a quality lifestyle has made the Western Cape one of the most desirable places to live,” he says.
Rental rates in the Cape Metro range from R14,000 to R18,000 per month for a one-bedroom apartment, R18,000 to R28,000 for two bedrooms and R35,000 to R50,000 for three-bedroomed apartments and penthouses.
This luxury home in Bantry Bay was recently let out by Seeff for R130,000 per month to a Johannesburg family relocating to Cape Town
KZN’S GREENER PASTURES
Durban is also seeing high demand for rentals across various areas. Pam Golding Properties area principal for Durban Coastal Carol Reynolds says: “In the lower price bands, affordability and interest rate pressure are forcing younger clients to rent rather than buy their own homes. At the upper end, there is a significant amount of general consolidation and liquidation of assets as people free up capital and turn to renting rather than owning.”
Licensee for Seeff Umhlanga Brett Botsis says residential rental yields here are reasonably good at about 4%-7%. In Umhlanga too, affordability is a big driver of the demand with the R12,000 to R25,000 per month range being the most active, but luxury rental homes priced up to R50,000 per month are also in demand. Umhlanga is seeing stock shortages of rental properties priced from R18,000 to R30,000 per month.
