Nov 10, 2017 7:13:57 AM

Where have local rental prices increased most?

Topics: Demand For Rental Properties 0

The latest PayProp rental index for the third quarter of 2017 released recently indicates where rental prices have increased and decreased across the South African property landscape.

We've seen how the state of the economy has influenced consumer confidence and put many of us into price pinch between rising food costs, fuel costs and less disposable income.

The index states that there was a significant drop in rental growth and an increase in inflation in September, the last month of the quarter. As a result, a closing of the gap is evident as rental growth returns to levels closer to inflation growth (last seen in November 2016).

More data released by the index shows that if you compare the year-on-year (YoY) growth rates of Q3 and Q2, you observe that rents are currently growing at a lower pace, and if you consider growth across the provinces, you can see why. Five out of the nine provinces saw a reduction in the rental growth rate while the four provinces showing (modest) increases contribute less than a third to the total weighting of the overall growth. As a result, the weighted average YoY growth rate decreased from 6.9% to 5.9% between Q2 and Q3.

Our experiences are similar to what the index identifies and despite it being a tough year, rental incomes are starting to make the climb back to the top. There are areas like the Western Cape and Gauteng, even certain markets in regions that appear to be on the decline have somewhat weathered this storm. Taking the Northern Cape for example, as the index shows, clocked YoY growth of 9.3% in Q3, up from a below-average 3.8% a mere six months before.

There are market factors that paint a bleak picture and affordability among consumers has become the result of macroeconomic instability, but the positive in the market, aspects like the rent-to-income ratio on an upward trend, property remains a solid long term investment.

Statement by

Richard Gray

Harcourts Africa Chief Executive Officer