What to do with your property - the rental option

IN A move welcomed by the residential property industry, national property manager Trafalgar has launched SA's first residential property rental index, saying that the lack of sound rental information has been a major cause of arguments over a price bubble.

Trafalgar CEO Neville Schaefer says it has been preparing the index with statisticians for a year to make sure it is acceptable to economists and academics.

Schaefer has released the first six-month period of the index, from December last year to June this year. The index shows that rents have increased nationally by an average of 5,24%. Cape Town had the highest increase of 8,05%, followed by KwaZulu- Natal with 6,11%.

Property economist Erwin Rode, of Rode & Associates, welcomes the introduction of an index, saying the more information available the better.

Rode says the problem with the property industry is that it has fewer statistics available than the macro-economy. "It's very costly to put together statistics for property," he says.

Bruce Swain, regional director of RE/MAX of Southern Africa, says anything assisting the property industry and clients to make better informed decisions is welcomed. Swain says the only real guide to residential property is the deeds office.

He also points out that there is sparse information on residential property sales, particularly relating to how long a property has been on the market, as well as what price it was listed at and what it was sold for.

Trafalgar says the index to December this year will be released early next year in graphic form for the first time, and that a separate graphic will show the index adjusted for inflation to give real rent increases.

"One period has limited use for analysts and investors, but cumulatively it will become more powerful with each period's results," says Schaefer.

He says the index already shows that average rents continue to increase faster than inflation despite falls in some areas where new development, and tenants becoming buyers because of falling interest rates, have pushed supply ahead of demand. Schaefer says this shows clearly that there are still opportunities for residential investors who are not seduced into buying in oversupplied areas.

Article from: www.bday.co.za