South Africa’s property industry, specifically the rental segment of this dynamic market, has continued to change and respond to various market factors and developments.
Data emerging from the residential rental market over recent years has pointed to a weakening trend even prior to the 2020 Covid-19 lockdown, with the second quarter lockdown period increasing the severity of those pressures, FNB said.
From a multi-year high of 5.68% year-on-year as at September 2017, the CPI for Actual Rentals has seen its rate of increase slow to a lowly 1.8% year-on-year as at June 2020, with year-on-year deflation now appearing a distinct possibility.
The key economic source of pressure on the rental market has been attributed to the long-term stagnation of growth in the South African economy.
This source of pressure constrains the finances of existing rental tenants, thereby curtailing their ability to pay rent timeously and absorb rental escalations.
This in turn is likely to dampen aspirant tenant demand for residential rental property. In addition, low interest rates may be working moderately in favour of home buying and against renting, further constraining rental demand growth.
What is the state of the rental market in terms of affordability?
Jobs portal Adzuna recently published new data showing the cost of living and working in South Africa’s largest cities.
The data is based on a comparison of more than 100,000 job listings and rental costs from some of South Africa’s biggest property websites.
Adzuna analysed average salary data and compared it to the average property value. The report shows that while thousands of South Africans face salary reductions and retrenchment, the cost of accommodation in the country’s major cities is still on the rise.
When compared with the average monthly salaries and average rental prices, these are South Africa’s most affordable cities to rent in:
Bloemfontein – 15% of monthly income spent on rent
Polokwane – 16% of monthly income spent on rent
Rustenburg – 17% of monthly income spent on rent
Pretoria – 19% of monthly income spent on rent
Nelspruit – 19% of monthly income spent on rent
Selected suburbs with some of the lowest rent in various cities
Bloemfontein’s rental properties are found in high rise buildings, multi-storey walk-ups, backyard rentals, peoples’ homes, and other configurations. Some are formally rented and managed by a property letting agency, while others are let by households or small-scale landlords.
This affordable neighbourhood is the ideal choice for beginner flat and townhouse dwellers and for those who want to start scaling down. This area is centrally situated to the CBD. It lies at the foot of Naval Hill and the Franklin Game Reserve, making it a beautiful area for nature-lovers to explore. A quick check on property prices varied significantly, with prices around the R2 000, R5 000, R10 000 for flats and R15 000 and R20 000 price points for houses.
Pretoria East has become an attractive option for a number of young families and professionals, and as such there has been an increased demand for quality properties. Rental demand is high in suburbs in the far east of Pretoria like Hazeldean, Silver Lakes and Lombardy, and if your property is located in any of these areas, it may be a good time for you to list your home for rent to cash in on the increased interest. Sectional title units in these estates can cost anything from between R7,000 to R16,000 per month and full title homes in upmarket estates can go up to between R40,000 and R60,000 per month.
This well- maintained suburb of Linden is home to people from a diverse range of backgrounds, nationalities, religious groups and age groups. A number of new developments have been built in the area to cater for the growing demand from people wanting to move to the area. Rental prices in this suburb range around Flat: R6 900, House: R16 000, Complex: R8 500.
Much money has been spent recently to upgrade and improve the central areas of Johannesburg. Tenants are attracted by the convenience of living close to businesses and amenities. Affordable rent is also a key driver of demand in the area. Rental prices in this suburb are around this range: flat – R3 825, house – R10 600, complex – R6 500.
Randpark Ridge is becoming an increasingly popular choice for those looking for convenient suburban living in the heart of Johannesburg. Located north-west of Joburg and west of the N1 highway, Randpark Ridge is a large, well-established suburb that is popular with active renters due to the good choice of outdoor activities available in the area. Properties are well-priced and the suburb boasts many amenities and easy access to major roads. Rental prices in this suburb are around this range: flat – R6 500, house – R14 500, complex – R8 950.
The relative affordability of suburbs in the Western Seaboard is a big attraction for many who move to the area. But cheap rentals are not the only reason for the popularity of suburbs like Parklands. The area offers an amazing beach lifestyle, epic views, good schools, and numerous shopping and medical facilities. Rental prices in this suburb are around this range: flat – R8 000, house – R13 650, complex – R10 000.
“Obs” – as the locals call it – derives its name from the Royal Observatory, which was built in 1820 and is now home to the headquarters of the South African Astronomical Observatory. This multi-cultural suburb attracts a diverse pool of renters to the area. The suburbs location, minutes away from the university, city centre, shops and main roads, makes it one of the most convenient areas to live in in Cape Town. Rental prices in this suburb are around this range: flat – R12 950, house – R15 000, complex – R11 250.
This family-friendly suburb is one of the most established on the Western Seaboard, and boasts excellent schools, medical facilities and shopping centres. The area is also a business and commercial hub which negates the need for many residents to brave the commute into the city. Rental prices in this suburb are around this range: flat – R10 500, house – R14 000, complex – R12 750.
Relaxed, laid back Gardens is another suburb that owes much of its popularity to its close proximity to the city centre. Younger residents are attracted by the convenience of being able to walk to work, nightclubs or restaurants in the nearby CBD. Older residents enjoy being able to access shops and medical facilities easily, or catch a MyCiti bus to get further afield. Rental prices in this suburb are around this range: flat – R15 250, house – R21 500, complex: R27 500.
The trendy suburb of Glenwood has a mix of coffee shops, eateries and excellent schools that continue to attract renters to the area. Having a university on the doorstep and a central location close to the CBD also accounts for its enduring popularity. Rental prices in this suburb are around this range: flat – R6 550, house – R13 250, Complex – R10 250.
Musgrave is a melting pot of cultures, ages and interests. The suburb is convenience personified, with its central location and easy access to main roads making it simple to get to any other area in Durban. The area has good public transport services from buses and taxis; is conveniently close to schools, universities and colleges; and is home to Durban’s oldest shopping centre, Musgrave Centre. Rental prices in this suburb are around this range: flat – R8 500, house – R12 250, complex – R11 000.
The property market is dynamic and the prices and info above is bound to fluctuate from time to time. But when you think of rentals, the guidelines above should be a good start.
This article was republished from Comaro Chronicle with permission