Supply shortage affects Fourways rental market

Although current market conditions have created a strong demand for rental property in the Fourways area, the amount of lease agreements have dropped by 20% when compared with the same period last year, says Dieter Harck, Broker/Owner of RE/MAX One Hundred, which operates in the Johannesburg suburb of Fourways and surrounding areas.

According to Harck, his office has concluded approximately 40 rental agreements to date this year, which is somewhat lower than the numbers experienced during 2011. Previously, RE/MAX One Hundred concluded an average of over 100 rental deals per year over the past four years with an annual rental value of approximately R6, 9 million.  “While demand for rental property continues to be very high, the rental market in our area is a bit stagnant and has not performed as well as predicted. This is largely due to the fact that rental property in the area is currently in short supply and there are no new developments under construction or recently completed to cater for the huge demand,” says Christine Chambers, rental specialist for RE/MAX One Hundred.

Harck notes that although limited access to finance has created the demand for rentals due to many potential homeowners having little choice but to rent, it has also created a situation where tenants are holding onto their rental property for longer and renewing their lease agreements rather than moving. “Many buyers have a high debt-to-disposable-income ratio, which translates to only half the bond applications being approved by financial institutions. This means that potential buyers will have to continue renting until they bring down their household debt levels and show the necessary affordability levels required to gain finance approval. With limited bond approvals, no rental properties are being freed up,” says Harck.

Adrian Goslett, CEO of RE/MAX of Southern Africa, says: “It is vital for consumers who aspire to owning property to reduce their debt and start a savings program. Aside from needing to show a good level of disposable income, banks often require the buyer to have a deposit before they are willing to approve the home loan application.”

According the Harck, most rental properties in the area fall within the R5 000 to R8 000 per month range, with the greatest demand for those properties that rent out for between R5 000 and R6 500 per month.  During 2011, 96 rental agreements were signed with an average rental of R6 300. Over 50% of those were sectional title one and two-bedroom units and the majority of tenants for these units were young professionals under the age of 30 years, working within the Sandton CBD.  Harck says that this is due to the proximity Fourways enjoys to the financial hub of Sandton, along with the fact that its properties offer more competitive rental prices than similar ones in the Sandton CBD. Approximately 20% of the rentals were freestanding houses, while the balance consisted of three-bedroom cluster homes.

“Rental property continues to be in demand. However, for the number of lease agreements to  reach new and improved levels and the rental market to regain some buoyancy, a combination of factors are necessary to lift the market on the supply side of the equation, as demand far outstrips the supply of rentable stock,” Harck concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us