Demand for rentals is growing, making the market the busiest it has been since 2018.
Gauteng and KwaZulu-Natal director and national group rental manager for Tyson Properties, Murray Haywood, has noted an increasing trend of people opting to rent rather than buy.
“The factors influencing this extend beyond the daunting costs of running a house or the consistent expense of maintenance. The younger generation wants to be fluid and follow careers rather than be bogged down by bricks and mortar.
"They put spare funds into financial investments which are more liquid,” Haywood said.
Unsurprisingly, Gauteng, South Africa’s economic hub and repository of corporate jobs in finance and technology, is the most vibrant rental market.
Suburbs such as Sandton and Rosebank with trendy apartments, proximity to top schools, shopping centres and good transport links are said to be the major drawcards.
“The ‘rental’ asset class is said to be growing nationally.
Agencies like Tyson Properties said they were making a concerted effort to set up rental books and establish rental portfolios within their franchise networks.
“We use credible entities establishing easy and up-to-date lease agreements, do thorough background credit checks and are now consistently training our agents so that they know what to look for when renting a property and what questions to ask,” Haywood said.
According to the TPN Rental Market Strength Index, the national residential vacancy rate has dropped to 4.42%, the lowest level since TPN began tracking this data in 2016, indicating that more people are seeking rental accommodation.
Although popular for different reasons from natural beauty, sophisticated lifestyle, tourism and expanding tech and creative sectors, Cape Town and Gauteng are both in high demand for rental housing.
Tyson Properties’ rental manager in Cape Town, Southern Suburbs, Stephen Adamo, noted that areas such as Bishopscourt, Constantia, and Newlands (all southern suburbs) are drawing attention from renters.
“The advantages of renting in these areas vary. Often, we have clients who are moving from up country or relocating to South Africa for the first time from another country. Renting allows these clients to understand the areas better before settling down and buying a property,” Adamo said.
Last month, Mariël Burger, area manager at Pam Golding Properties for Cape Town North, said the rental market in Bellville, Durbanville and Parow is experiencing strong growth.
“Some of the reasons for this include an influx of residents from other provinces to the Western Cape and the area’s proximity to business hubs like Tyger Valley and Century City. Demand is outpacing supply, so the market has become more competitive, with resulting increased rentals and a shortage of rental stock,” Burger said.
The area manager said significant numbers of people are moving to Bellville, Durbanville and Parow from other regions around South Africa.
“Many of these new arrivals are renting while they look for the right property to buy, which has definitely increased the demand for rental properties.”
He said that for those looking to rent larger properties, renting a R15 million-plus property tends to work out cheaper than purchasing.
“Here, rental allows more flexibility, especially if you need to be closer to educational institutions, work, beaches or your individual lifestyle choices,” he says.
Even among locals, he points out that the rental market in Cape Town and the Southern Suburbs is also growing for a myriad of reasons that include access to basic services such as electricity, water, transport, security, privacy and proximity to top schools and places of work.
“There are also still a few properties in the Southern Suburbs that provide clients with an abundance of space without compromising on location or accessibility. The market is growing year on year with an 8 to 10% escalation in rentals per year,” Adamo added.
Tyson Properties said those on the lookout for properties to rent can expect increased demand for high-end apartments in city centres as well as very competitive rental prices in desirable areas.
The company said decisions need to be made quickly due to high demand, and having the right paperwork on hand will get one over the line ahead of others.
Dr Omalola Arise, who is an Academic at MANCOSA, said last month that the 0.5% VAT hike muted by Finance Minister Enoch Godongwana said the property sector, in particular, will feel the strain as new developments become more expensive, transaction costs rise, and landlords may pass on higher operating expenses to tenants through increased rentals.
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