Residential property landlords hoping for a big step-up in their 2010 rents will almost certainly have to think again.
The reason for this is that Eskom's proposed price hikes, which could add 30% to most householders' bills as well as 10% to what is paid on municipal rates and services, will make budget tightening in the year to come essential.
This was the view of Rob Lawrence, national manager of Rawson Finance, who added that mortgage bond approvals will also be affected by the Eskom price hikes because potential buyers' disposable incomes will be reduced.
"This is a pity because the whole scenario has been looking a lot rosier in recent months. Between May and September submissions for bonds in our company rose by over 100% and grants by just on 60%, and I understand that this has been the experience of other companies as well.
"In months ahead, we could, however, see a levelling off not only as a result of these increased costs but also because too many of the really good buys have now been taken up – the desperate must-sell-as-soon-as-possible sellers are no longer so evident."
Lawrence said that sales figures, although still rising and causing deflation in prices to dwindle almost to zero, will also probably feel the effect of the increased electricity costs.
"Real estate agents in situations like these traditionally advise clients to continue to look for property but to scale down their expectations, the wholly valid argument being that it always pays to get in on the property owning ladder as soon as possible and to cut your suit according to your cloth. This is good advice for current times."
Next year will still be a good year for rentals as a spike in demand is already underway laeding up to the Soccer World Cup.
Marion Taylor, Greeff Properties Atlantic Seaboard director, says although the Soccer World Cup itself will only take up 36 days in June and July, some of the bookings coming in are for six months or longer.
This, she says, appears to be because those serving the Soccer World Cup (on a variety of fronts) from TV coverage to food catering, often have to be in South Africa for long periods before and after the cup events.
Asked if signing up unknown tenants from another country could put the property at risk, Taylor said large upfront deposits will accompany all bookings and will not be refunded until the departure of the tenant and careful inspection of the property has taken place. "In addition, the full rental will also be payable in advance." – Eugene Brink
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