Increasing Rental Rates

Increasing Rental Rates

 

 

 

 

 

 

 

Currently 51% of homeowners who sell their properties because of increasing financial pressure, would rather rent than buy cheaper property. Undersupply of rental stock is ever-increasing and this is going to put active property investors in a favourable position in the next few years. Rental growth has moved from 6% in June 2010 to 8.3% in June 2011, this is according to the Stats SA Quarterly survey. Joburg rentals in the middle house segment have been considerably strong with high demand for 1 and 3 bedrooms and slightly less for 2 bedroom units.

The corporate rental market however, is not doing as well as a result of corporate organisations cutting their budgets and being reluctant to spend more than R25 000 per month on high-end furnished properties. An oversupply of furnished properties in the Northern suburbs is a direct result of the 2010 Soccer World Cup which was hosted in SA last year.

Advice to owners of furnished high-end properties is to ask market related rental prices. Overpricing can be dangerous as you run the risk of the property being vacant for weeks if not months. Owners should calculate the cost of the unit being vacant VS the monthly cost of storage to ascertain whether it would be more financially viable to rent the property without furniture at a lower rental but also with less risk involved.

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