Eskom rate hikes will have an impact on rents and on bond grants, says Rawson finance executive

Residential property landlords hoping for a big step-up in their 2010 rents will almost certainly have to think again – and the reason for this is that Eskom’s proposed price hikes, which could add 30% to most householders’ bills as well as 10% to what is paid on municipal rates and services, will make budget tightening in the year to come essential.

This was said by Rob Lawrence, National Manager of Rawson Finance. Mortgage bond approvals, he added, will also be affected by the Eskom price hikes because potential buyers’ disposable incomes will be reduced.

“This,” said Lawrence, “is a pity because the whole scenario has been looking a lot rosier in recent months. Between May and September submissions for bonds in our company rose by over 100% and grants by just on 60%, and I understand that this has been the experience of other companies as well.

“In months ahead, we could, however, see a levelling off not only because of these increased costs but also because, too, many of the really good buys have now been taken up – the desperate must-sell-as-soon-as-possible sellers are no longer so evident.”

Lawrence said that sales figures, although still rising and causing deflation in prices to dwindle almost to zero, will also probably feel the effect of the increased electricity costs.

“Real estate agents in situations like these traditionally advise clients to continue to look for property but to scale down their expectations, the wholly valid argument being that it always pays to get in on the property owning ladder as soon as possible and to cut your suit according to your cloth. This is good advice for current times.”

Article by: www.rawsonfinance.co.za