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Cape Town - The residential property rental market is steadily picking up pace, with the national weighted rental rising from R5 473 at the end of March to a new high of R5 641 at the end of June.
This is its second consecutive growth period in the 2013 second quarter, according to PayProp CEO Louw Liebenberg.
“The year-on-year growth rate has for the first time in over 18 months exceeded the 7% level, to a current high of 7.82%,” said Liebenberg. “The highest growth rate recorded was 13.7% in July 2010, during the Soccer World Cup.”
FNB economist John Loos said the rental market entered a slightly better period in January 2013, with many letting agents reporting stock constraints.
“While the year-on-year numbers don’t indicate a massive surge, signs indicate that the rental market is headed towards a slightly better performance,” he said.
The trend from previous indices continues, with national growth driven by Limpopo, Mpumalanga and KwaZulu-Natal, and Limpopo overtaking Mpumalanga as the province with the highest average rental.
Growth rates in the Northern Cape remain high, with the area recording year-on-year growth of above 10% for the past eight months.
Liebenberg said the town with South Africa's priciest average rental is Umhlanga Rocks, which narrowly overtook Lephalale and Musina for the top spot.
Other second-quarter trends include:
Fast growth in middle class rentals
There have been steady gains in the R5 000-R7 500 price category, with these gains taken mainly from the lower price bands.
Despite this growth, the dominant rental range remains R2 500-R5 000.
Rising costs bite into landlords' profits
Gross yields have shown only a slight increase to 6.3% from the previous high of 6.2%, while net yields are also fairly stable at 5.1%.
Liebenberg said the spread between the two yield figures has also remained constant. This shows that landlords' gains from the rise in rentals have been offset by an increase in the costs associated with owning and maintaining a rental property.
Although current levels of rental increases are likely to be sustained by stock constraints, landlords will hardly benefit as net yields are under pressure from rising costs, said Liebenberg.
This is its second consecutive growth period in the 2013 second quarter, according to PayProp CEO Louw Liebenberg.
“The year-on-year growth rate has for the first time in over 18 months exceeded the 7% level, to a current high of 7.82%,” said Liebenberg. “The highest growth rate recorded was 13.7% in July 2010, during the Soccer World Cup.”
FNB economist John Loos said the rental market entered a slightly better period in January 2013, with many letting agents reporting stock constraints.
“While the year-on-year numbers don’t indicate a massive surge, signs indicate that the rental market is headed towards a slightly better performance,” he said.
The trend from previous indices continues, with national growth driven by Limpopo, Mpumalanga and KwaZulu-Natal, and Limpopo overtaking Mpumalanga as the province with the highest average rental.
Growth rates in the Northern Cape remain high, with the area recording year-on-year growth of above 10% for the past eight months.
Liebenberg said the town with South Africa's priciest average rental is Umhlanga Rocks, which narrowly overtook Lephalale and Musina for the top spot.
Other second-quarter trends include:
Fast growth in middle class rentals
There have been steady gains in the R5 000-R7 500 price category, with these gains taken mainly from the lower price bands.
Despite this growth, the dominant rental range remains R2 500-R5 000.
Rising costs bite into landlords' profits
Gross yields have shown only a slight increase to 6.3% from the previous high of 6.2%, while net yields are also fairly stable at 5.1%.
Liebenberg said the spread between the two yield figures has also remained constant. This shows that landlords' gains from the rise in rentals have been offset by an increase in the costs associated with owning and maintaining a rental property.
Although current levels of rental increases are likely to be sustained by stock constraints, landlords will hardly benefit as net yields are under pressure from rising costs, said Liebenberg.
