Rentals rising steadily

Rents for property managed by residential property manager Trafalgar are continuing to rise steadily.

"The latest index covers the worst recession South Africans have experienced since the 1980s, yet on average rents rose in all cities," Trafalgar CEO Andrew Schaefer said in a statement on Monday.

"Once again property is showing its steady, compound returns for investors," Schaefer said.

Real rentals falling in KZN and Jozi

Trafalgar's national rental index rose seven percent in the nine months to March 2010 — an annualised 9.5 percent.

This was less than the 11.2 percent increase for the year to June 2009 and the six year annual trend of 10 percent since the company started the index in 2003.

However, increases in KwaZulu-Natal and Johannesburg rose less than inflation — at 4.25 percent and 4.8 percent — while East London continued outperforming the rest of South Africa at 14.3 percent.

East London rentals are tops

The East London index stood at 210 from a base of 100 in 2003, a compound rental growth of 13 percent a year over the six years.

The national index was at 174 in March 2010 with Cape Town the laggard at 169, just behind Johannesburg's 170.

"Households that would normally buy have been forced by poor affordability and high household debt to rent rather than buy and this has underpinned the rental market," Schaefer said.

Rental stock is low

"We have few empty flats in our portfolio," he added.

The Trafalgar rental index measures the longitudinal increase in rents of the same unfurnished two bedroom flats, across a range of suburbs, in each of the cities concerned over the period December 2003 to March 2010.

A sample of around 50 flats has been tracked for each location.

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