Rental Demand Still Rising

(The information in this article is courtesy of BusinessDay - Rents rise as property market slows – 4 February 2009)

The Trafalgar rental index show that rent rose by around 13% from January to December last year. This can mainly be contributed to the to stricter lending criteria in the last quarter of 2008, urging people who were unable to get a home loan approve, to rent.

According to Samual Seeff, CEO of Seeff Properties, these strict lending criteria will sustain higher rental demand throughout 2009.

The index also showed regional increases ranging from 9% in Johannesburg to 21% in Port Elizabeth. Cape Town rental prices rose 11%, KwaZulu-Natal rose 14,5% and rents in East London were 15% higher than December 2007. Pretoria rents rose 16%.

According to Seeff it is expected that inflation and the interest rate environment will improve, however customers will use the opportunity to improve household debt situation and other obligations before buying a house.

Barry Everitt, MD of Chas Everitt International, says banks will basically determine where the rental market goes this year. He says the property market will continue to have a tough year as long as banks continue to tighten their lending criteria.

Trafalgar MD Andrew Schaefer warned investors not to increase rent too fast in difficult times - where cash flow is far more valuable than profit.

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