A recent survey sent to the RE/MAX offices operating in Gauteng revealed that tenants are facing affordability issues in many suburbs within this region.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, suggests that current economic conditions are likely to be the underlying cause for this ‘empty-pocket’ syndrome.
According to Stephanie Narainsamy, Broker/Manager of RE/MAX One, the rental market in and around Edenvale and Bedfordview currently favours tenants, yet some still struggle to find a property owing to their price expectations. “The average rental price in our areas is roughly R8 000 per momth. I would advise tenants to increase their budgets, as many have unrealistic expectations within the current market conditions,” says Narainsamy.
Alta Botes, Rental Agent at RE/MAX All Stars operating in Alberton and Germiston, sympathises with Narainsamy’s sentiments around this issue. “We find that a lot of applicants do not qualify due to their own financial status. We therefore have applications that are declined, and it takes longer to find a qualified tenant,” Botes elaborates.
However, when it comes to the overall state of the rental market in these areas, Botes says that the monthly procurement of rentals varies month to month. “Recently, we have had a couple of months with a higher rental demand than supply. However, while the demand for rental properties is still high, we find that more and more owners are entering the rental market now owing to the slump in the sales market, which could lead to a shift in rental market conditions down the line,” says Botes.
In Rosebank, Leon van Zyl, Broker/Manager of RE/MAX Advantage, reports a healthy rental market with a very favourable 70.35% on time, in-full payments from tenants, beating the provincial average rate of 64.18% and a national rate of 66.86% (stats courtesy TPN Credit Bureau). However, he still cautions landlords to consider the national vacancy rate. Van Zyl explains that there is an oversupply of properties nationally, and a low demand with roughly a 13% vacancy rate.
“The best advice to any landlord would be to consider how much they stand to lose if they don’t let out their property. For example, a property listed at R10 000 per month may get no response, leaving the unit vacant for two months and amounting to a direct loss of R20 000 (not to mention levies, bond payments, effluent and refuse charges). However, if the price is lowered by R500 and the property is let out immediately, then the loss is expressed as R500 multiplied by the lease term. In this example, the loss over 12 months amounts to R6 000,” says Van Zyl.
RE/MAX Executive Group reports that Fourways is another stable rental market in the region, with a paid-on-time and in-full rate of 70.88%. Roughly 40% of transactions in the area are on second properties, meaning that a great number of homes are bought owing to the investment value of this suburb. Tenants who reside in the greater Fourways area are also advised to consider that, in due time, Fourways will be recognised as an economic hub, and as such, rental prices will be inflated dramatically. A tenant who is in a position to buy must do so now, as this will ensure that an asset with great capital appreciation potential is acquired at a fair price.
“House price growth has been subdued across the country, with most provinces reflecting growth rates slightly below current inflation levels. According to Standard Bank research released in July, the House Price Index (HPI) for Gauteng slowed to 3.6% year-on-year in June. Considering the current house price growth rate, tenants who choose to enter the property market now stand to get a better deal than if they delay and risk having HPI rise to beat inflation,” says Goslett.
