Flat rents still rising, says Rode

Posted On Wednesday, 10 April 2002 10:09 Published by eProp Commercial Property News
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Flat  rentals have maintained an upward trend in the past few years due to an insufficient supply of new rental stock, says the latest report of property services and consulting company Rode.

Neville SchaeferThe report says little new rental stock has been added to the market since 1998, and demand has outstripped supply. It shows Pretoria ahead of other SA cities, with 28,3% growth to an average of R1611 in flat rentals in the fourth quarter of last year compared to R1256 of the previous comparable quarter.

Pretoria is followed by Cape Town with 16,9% growth to R1786 from R1528.

The report says all SA cities achieved growth rates in excess of the consumer price index and the Bureau for Economic Research's building cost index.

Johannesburg's flat rentals grew 5,5% to R1789 from R1667 , Durban's 4,3% to R1562 from R1496, Port Elizabeth's 5,5% to R1118 from R1060 and Bloemfontein's 8,1% to R1089 from R1007.

Trafalgar Property and Financial Services CEO Neville Schaefer says these figures support the view that flats have been a solid investment. 'Investors should continue to view flats as a good option in 2002 as we do not expect any decrease in rental growth,' he says.

The report forecast a 6,1% growth in flat rentals this year and 7,5% increase next year.

While post-1994 election euphoria sparked building activity, development of flats and townhouses has slowed since 1998, when a steep increase in interest rates prompted a shift from buying to renting.

The report says Statistics SA data shows that the fall in building activity has been far greater for flats than for townhouses. 'The consequence is that while demand for sectional title units has remained strong, the need for flats to rent has increased at an even greater rate,' says Schaefer.

Rental stock has been eroded by the conversion of flats to sectional title ownership, he says.

According to the report, Johannesburg's flat rentals have been rising since 1998. One-bedroom flat rentals in Johannesburg flats have posted an above-inflation growth since 1995.

Flat rentals in Pretoria have shot up since the beginning of 1999. Most of Pretoria's blocks of flats are around the city centre in areas like Sunnyside, Arcadia and Hatfield, and have therefore enjoyed strong demand.

Since 1990, Cape Peninsula flat rentals have put in the best performance of all cities.

Last modified on Thursday, 15 May 2014 16:01

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