Could rentals start to boost buying soon?

Amid a growing shortage of rental housing stock and rising monthly rentals, more and more tenants are now exploring the possibility of becoming homeowners in their own right.

That’s the word from BetterBond CEO Rudi Botha, who notes: “The recent statistics from FNB showing that the percentage of home purchases being made by buy-to-let investors is now only around 8%, compared to about 25% during the last property boom, clearly indicate that there are far fewer properties being added to the stock of rental homes.”

One reason for this, he says, is that the banks generally require much higher percentage deposits in order to approve loans for the purchase of investment properties rather than primary residences.

“Another is that rental increases have been constrained over the past three years by the need for landlords to take account of large increases in electricity and other municipal costs that have cut into tenants’ disposable incomes and reduced rental affordability.”

Nevertheless, says Botha, rentals in some areas – notably the “power station” towns and others where new mining activity is flourishing – have risen to levels where many tenants are seriously considering that it might now be cheaper to buy than to rent.

“This trend is also being fuelled by the current low interest rates and by improving access to bond finance, especially for first-time buyers.

“At the same time, we are seeing many of those who reluctantly gave up homeownership and turned to renting in the 2008/ 09 downturn now returning to the market as homebuyers. They have had a chance to put their financial affairs in order and are keen to become homeowners again before prices (and possibly interest rates) start to rise again.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 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.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us