select
|

Residential rental values improve

The PayProp Rental Index has shown that the average rental in South Africa breached the R7 000 threshold ending Q4 2016 at R7 062.91.

The quarterly PayProp Residential Rental Index is drawn from the actual payment data of 1 000 rental agencies administering 85 000 active leases.

PayProp Group chief executive, Louw Liebenberg, says the highest percentage growth for the quarter was recorded in December 2016, when average rentals were 7% higher than the same month the previous year.

“The jump to 7% is even more significant as historically the highest growth months have been October and November.”

As average rental values increase, so it is usual to see a migration from the lower to higher rental price categories. The largest jump in the final quarter was in the over R15  000 category where the proportion of all rentals grew from 4.8% to 5.9%.

The Western Cape takes the lead

The Western Cape improved on its steady +9% growth rates to breach the double digits and hit 10. 99%. On the other end of the spectrum, the Northern Cape continued to decline to just 2.11% from a high of 16.74% in 2015.

Liebenberg says that Limpopo is the most interesting province to watch as for several years the province topped the ranks with the highest average rental. This was largely due to an industrial development boom in the area which led to soaring demand for rentals fuelled by limited stock availability.

“It was like the switch was flicked towards the end of 2014 and construction stopped, mines had strikes and ancillary businesses closed causing a plummet in the growth rates,” says Liebenberg. “Surprisingly, un 2016 the province returned to steady growth – so much so that it is now the province boasting the fastest growing average rental rate.”

Owners are in the pound seats

Once rental property costs are taken into account, net yields on investment properties still show growth. A growth rate up to 5.3% from 4.8% at the beginning of 2015 bodes well for investors. Although gross yields grew by 6 basis points, net yields only grew by 5 points – indicating that the cost of owning a property has increased marginally faster than the growth of rentals.

Tenants remain cautious

While average declared income remained flat, there was a drop in the amount required by creditors for debt repayment, from R11 430 a month in January 2015 to R10 772 at the end of the year. This means that instead of spending 37% of their disposable income on debt, tenants now spend 35%.

“The patterns we are seeing in tenant behaviour mirrors what is being reported with regards to subdued tenant expenditure over the festive season by consumers. Tenants seem to have curbed spending and spent within their means, which is an extremely encouraging metric,” says Liebenberg.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK