Higher interest rates spur the residential letting market
THE residential rental market has started the year with a bang as higher interest rates make renting a more attractive option than buying for many people.

Raal Nordin, CEO of Just Letting, a residential letting company with 80 franchises nationwide, says last month was its best to date. His company signed 1500 leases countrywide. Just Letting operates in the higher-end R4000-R5000-a-month rental market.

“If we had more (property) stock we would have let more. We had a serious stock shortage,” says Nordin. Strong demand is evident across the country, including major metropolitan areas such as Western Cape, KwaZulu-Natal and Gauteng.

“This a trend. There is always a shortage of residential stock for rentals in January. People start looking for accommodation in January when they make career moves. It’s a trend for this time of the year,” he says.

Another contributor was the interest rate hike in December, which scared people off buying.

Nordin says the residential property market is “very expensive at the moment”, and renting is now more attractive.

The lower-end rental sector of up to R3500 a month is also experiencing strong demand, especially in Johannesburg’s inner city and inner-city fringe areas.

Neville Schaefer, chairman of residential property managers Trafalgar, says demand is “insatiable” in Johannesburg’s inner-city rental market, which caters for the lower end of the market.

“We have put up our rents by between 12% and 15% each year for the past three years,” says Schaefer.

Demand for space in Johannesburg’s inner city is far greater than in the northern suburbs.

“Rental demand in Johannesburg is insatiable, given the city’s rapid economic and income growth. Exacerbating the drive is an even higher than usual population growth fuelled by the growing stream of Africans from north of the Limpopo seeking economic and political refugee status.”

Schaefer says the inner city offers affordable accommodation. Rentals in Pretoria have tended to lag behind those in Johannesburg’s inner city.

Trafalgar has budgeted for a 10% increase in rentals every year in Johannesburg’s inner city.

Schaefer says foreign Africans are making a lot of inquiries about rental accommodation in areas such as Hillbrow. He says there is more interest in Hillbrow from foreigners than locals.

Article by: Nick Wilson - www.businessday.co.za