Rental trends for the year ahead

Rental trends for the year ahead

Category Rentals

Rental market trends for 2020

The rental market remains buoyant, driven by a number of factors according to Seeff’s rental market specialists.

Although stable, rental rates remain under pressure. According to TPN, 2019 saw 4% growth nationally with only KZN above this at 5%. More of the same is expected for 2020. Landlords will need to keep their expectations in line with the market and agents expect that rents will only start rising once the economy picks up.

One emerging trend is an increase in people preferring to rent while they wait to see how the economy and political environment unfolds. A second is that the unaffordability of property in the high demand areas close to business nodes is increasing demand for rentals with people then investing elsewhere.

The rapidly rising rental rates pre-2018 pushed rental investments which has had the effect of overstock in many areas, or at least adequate levels to meet current demand. That said, the rapid urbanisation and migration to coastal and lifestyle areas continues to support demand for rentals.

There is also a rise in tenant delinquency and poor credit records; all reasons why the intervention of a rental agent is delivering excellent value to landlords.

Cape rental trends

The Cape rental market continues its excellent performance although there are some overstocking issues which persist in certain areas including those caused by the high rate of developments in areas such as the CBD.

High-demand areas such as Blouberg is seeing a rise in demand again. Escalations though remain in the 5%-6% range. Landlords are cautioned to keep increases down as tenants are now often vacating for more affordable properties leaving the risk of vacancies and a potential loss of income.

General trends include a demand for fibre-ready and pet-friendly accommodation. Security estates and complexes remain the top choice. Semigration is taking off again while luxury tenants continue migrating to areas such as Camps Bay and Constantia and surrounds. Hout Bay and Somerset West are also seeing a rise in demand for luxury rentals.

Franschhoek’s rental market is overstocked compared to the prior two years and lower priced rentals are now sought. Summer clients are preparing to depart which will add further stock. Prices remain flat. Hermanus meanwhile reports that landlords are becoming more aligned to the market and, despite the flat outlook, rates are increasing by up to 8%.

Garden Route and Eastern Cape rental trends

George continues seeing an influx of people looking to rent before buying. Some rental properties are now being sold while tenants are also starting to enter the buying market. Renewal escalations are at 5%-6% and at 10%-12% for new leases.

Kenton on Sea and Port Alfred remain competitive and reports that more people are renting to remain flexible with regard to where to live and whether to emigrate. Holiday rentals are about 40% down on the previous year.

Gauteng rental trends

Although a competitive market, rental demand continues upwards, boosted by millennials and the freedom offered by renting versus buying.

Stock levels are relatively saturated, boosted by an influx of stock from sellers who are battling to achieve their selling prices and would rather let out their property until the market improves.

Tenants still have the bargaining power and will compare rental amounts and value. Price is therefore an important element that landlords need to take cognisance of.

Traffic has a big impact on the location choice. For families, school proximity trumps most decisions.

Properties need to be in a good condition and Wi-Fi or fibre-ready. Developments with leisure facilities such as gyms, clubhouses, parks and dams are big draw cards (especially in the upmarket areas).

Security and secure off-street parking are a major consideration for tenants which means that security estates, gated communities and smaller, more private cluster developments are popular.

KwaZulu-Natal rental trends

Aside from affordability, rental demand is boosted by new employment opportunities, industries relocating and major new projects. Semigration to the North Coast is another driver of the demand.

Queensburgh rental demand has declined due to affordability and a shortage of rental property. Landlords are trying to maximise their potential rental income by letting multiple homes and granny flats on the same property.

Overall, security remains important and security complexes are highly sought after.

People who rent in holiday coastal towns want to be near a CBD for work, but don’t necessarily want to live in these areas, as they are looking for a more relaxed and safer environment. Therefore the demand in the solely residential areas is priced higher.

Photograph/s enclosed: Camps Bay/Bakoven – R85 000/month for a spectacular beach front bungalow

https://www.seeff.com/results/residential/to-let/cape-town/bakoven/house/65069/

Author: Gina Meintjes