Gauteng's Rental Market in 2019
Category Property News
Last year was challenging for many South Africans as the rising costs of living resulted in household budgets significantly tightening. This had several knock-on effects on the South African residential property market, with the most pronounced being increases in demand for rental homes among tenants. The reason for this was simple since personal income took a hit by high costs, many people opted to live in rental properties due to the affordability and flexibility that it offered. They either placed a hold on buying their own home until they were able to afford one or, they were simply denied home loans due to bad credit ratings. While many others chose rental homes as it best suited their lifestyle. Regardless of the reasons for the soaring demand in 2018, the trend is here to stay, and 2019 will bring with it further growth and stability for the rental property market.
Gauteng Leads the Way
Not surprisingly, Gauteng, KwaZulu-Natal and the Western-Cape have the most active rental markets which are expected to grow both in demand and new stock. And of these provinces, Gauteng is expected to be the most active in terms of the number of new tenants and small-scale buy-to-let investors.
Buy-to-let investors, who are flocking to Gauteng's rental market, are at an advantage when compared to the other key provinces, and this is because it has the optimum balance between supply, demand and affordability. For example, in Gauteng, sectional-titles are the most popular property type among investors, these sell for an average of R805 906. This is much more affordable than KZN and the Western Cape, where on average, sectional-titles sell for R940 485 and R1,54m, respectively. The pricing advantage favours Gauteng and also provides a great incentive for investors entering the market.
It also means that monthly rentals are much more affordable, and therefore, appeal to a broad spectrum of people from various income levels. Reports show that in 2018, the lower end of the market experienced the highest level of demand, with rental prices around R5 000pm - R8 000pm being the most popular. This trend is expected to continue into 2019 as the economic challenges faced last year will carry throughout the new year.
Affordability Drives Growth
Since affordability is a key driver of rental growth, suburbs that were once prominent rental destinations are starting to lose some of their appeal to more modestly priced areas. This year we can expect to see fewer tenants moving into popular suburbs such as Sandton, Bryanston and Rosebank, and instead, they are opting for areas such as Akasia, Alberton, Benoni, Centurion, Kempton Park, Midrand and Pretoria.
These areas are close to a number of amenities, transport hubs, and key freeways and highways. You can easily find a secure 2-bedroom sectional-title home for around R4 000pm - R6 000pm. Take Akasia as an example, here you can rent a 2 bedroom brand new apartment for around R5 500pm or a three-bedroom house in an estate for R8 500pm. Akasia has become an ideal option for young professionals with families who are looking for secure homes that are situated close to prominent business hubs in Pretoria, which is under 30 minutes away.
Gauteng's rental strength is also bolstered by its ability to cater not only to professionals but students and retirees as well. These sectors of society are driving the rental market and the province's development pipeline is poised to meet this demand. For example, Pretoria has become a popular destination for retirement homes and investments have poured into the city to accommodate this market. And today, there exists an ever-expanding network of retirement villages some of which include the very best that Gauteng has to offer such as Bronberg Retirement Estate, The Retreat Retirement Estate, Wilgers Retirement Village and Pretoria East Retirement Village.
This year, we can expect great activity in Gauteng's rental market as affordability, diverse and secure options, and convenience appeal to a growing number of tenants.
Author: CSi Property Group