Huge rental stock shortage in northern JHB

Several of the residential areas lying to the north west of Johannesburg – notably North Riding, Randpark Ridge, Weltevreden Park, Northcliff, Fourways and Bryanston – are now experiencing the worst rental stock shortages they have ever been through, says Sean McCauley, Rawson Properties Northern Region Director.

“Typically,” said McCauley, “one of Rawson’s 14 franchises serving this area will have 100 or more prospective tenants on their lists – and only three or four properties readily available.

“When we do list a property for rental on our website we will get up to 80 hits per day.”

This, said McCauley, has created a buoyant market for investors: his Randpark Ridge franchise recently sold a home at R495 000 on which the buyer has from day one been able to achieve a rental of R4 500, i.e. an 11% return which is far higher than the average.

“This return also excludes any capital appreciation that the property may achieve, and with the major South-African banks predicting property price increases between 5 and 8% this year, it may be possible to achieve returns in excess of 15%,” said McCauley.

Asked to what he attributes these stock shortages, McCauley said that that the decentralisation of the traditional Johannesburg CBD has much to do with it.

“New, important business nodes are now flourishing in Sandton, Randburg, Cresta and Fourways, and Johannesburg traffic being what it is, people now want to live as close to their work places as possible.

“Also contributing to the shortage has been the economic downturn: many second and third home properties rented out by investors have had to be sold as a result of the recession which has reduced the number of homes in the rental market. In addition, many “distressed” owners of homes have had to sell and are now also looking to rent.”

Property Genie, one of the leading property websites in South-Africa, says McCauley, reports that enquiries for northern suburb property have reached an all time high and that Bryanston and Northcliff are in the top five suburbs in Gauteng as regards enquiries received.

McCauley said that as no letup is in sight, now would be an excellent time to buy-to-rent.

“Prices,” he said, “are recovering but are still at a big discount to their “true” value, i.e. the value they will achieve by late 2011. Now is a great time to buy.”

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