Pietermaritzburg rental prices under pressure

Although the demand for rental property in Pietermaritzburg continues to perform well, rental price increases have not been at the same levels that they were in previous years, says Pelham Henwood, Broker/Owner of RE/MAX Midlands, whose office services Pietermaritzburg and the surrounding areas.

“Pietermaritzburg is regarded as the commercial regional core and has a wide feeder market incorporating a vast interior catchment, so there is never a shortage of tenants in the area. To date our office has concluded approximately 100 lease agreements this year, which is relatively high when compared with some other regions in the country. Demand remains strong and for the most part, the property market in the area has not really been affected by the downturn. However, we have found that in many instances, landlords have had to reduce increases on their rental property to assist cash-strapped tenants,” says Henwood.

He notes that historically the annual increases in the region were around 10%, however, more recently landlords have had to be satisfied with increases of between 7% and 8% in order to keep their tenants.  “In some instances, units recently vacated by tenants are being filled at lower rental prices than what they were achieving with the previous tenant,” Henwood says.

He says that a large number of tenants in the area are predominantly looking for flats or apartments that rent out between R3000 and R4000 per month. “We have two major groups of tenants in the area: one group being people that have just moved out of their family home and into their first place, and because Pietermaritzburg has had its capital status reinstated, we have a large number of government employees that have relocated. These tenants range in age from their early twenties to late thirties,” says Henwood.

Adrian Goslett, CEO of RE/MAX of Southern Africa, says that although there has been a marginal improvement in household debt levels since the clamp down on financial institution’s lending criteria, many South African households are still struggling with their debt-to-income ratio, which has affected their cash flow and affordability levels. With many consumers still unable to obtain a bond, demand for rental property across the country has gained momentum.

Henwood notes that with affordability a key element in obtaining the necessary finance required to purchase property, and with approximately one in every three applications being declined by the banks, many tenants are holding onto the rental property and renewing their lease agreements. “With tenants holding onto their property for longer, fewer rental units were available, however, the good news is that over the last 12 months there has been a 9% increase in available rental units within the area. This is possibly due to many buy-to-let investors taking advantage of the market conditions and growing their rental portfolios,” says Henwood.

RE/MAX Midlands currently has a three-bedroom rental property situated in an executive gated estate, which will be available from 1 August. The property has two bathrooms, a lounge and dining room, double garage, private pool, communal tennis court and there is a club house within the estate. The rental price is R13 000 per month.

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