Recently there have been many reports stating the major increase in demand for rental properties.However more recent information provided by experts has indicated that there is actually only a small increase this year and in some cases even a decrease in the demand for rental properties.
This will come as a surprise to most investors who expected a big increase because of the high cost and difficulty in obtaining a bond.The low demand is said to be due to the high cost of living these days because of the increase in interest rates recently.This will of course make food,petrol and other basic living essentials more expensive which in turn tightens the household budget.
The tenants then either downscale and move to smaller more affordable accommodation or decide to pool their resources and live together with family.So this is leaving investors with empty properties,defaulting tenants and major shortfalls on their bonds.
Many owners of rental properties can’t lower what they charge in rent either because of the effect this will have on their monthly shortfall.They have also been affected by the interest rate increases and have stretched their finances as far as they can go in most instances.This reality may further increase the percentage of distressed selling and properties in possession.
We, as South Africans, are still waiting for the full impact of what the global financial market has suffered through recently.Hopefully we are as resilient and protected as Trevor Manuel has indicated and we continue to grow as a country.We are still hoping for that interest rate cut to come soon and offer some relief to us all.
This is real nonsence. Firsly, PLEASE specify as to the segment of the market you are referring to. Upper, middle or entry level. Then this might just make a little sence to the not so informed reading this article. As far as my properties go, I have run out of properties to rent. Rental agencies will also tell you it’s hard to find properties to rent in the entry level property market.
If I look at all the repossession these days, there must be a bigger demand for rental. The people losing thier houses go and rent, because no bank will give them a loan again.
The article refers to recent and more recent, but that is not specific. When was it? Over the year 2008 there might not be drastic increases, but I would think over the last quarter there must be a increase as repossession increase. And we are going to see much more repo’s in the next 6 months.
I think we need to clarify a bit more.
I agree that the demand for rental properties has gone up but, the “high” rental amounts everyone was expecting did not materialise.
I know that the more “upper middle” segment of the rental market did not perform as well as the investors that have those types of properties expected. In my personal opinion, I have never believed that this market segment is a good place for buy-to-let properties, like I said, my opinion, not fact.
I have real estate in Gauteng as well as the Western Cape and honestly my Gauteng properties always get better rentals than the Western Cape ones. I also believed that I would see a substantial increase in rental money, but it just escalated as usual.
If you are getting above average rentals, please share your secrets with all of us here, after all, that is what this blog is for.
Again thx for all the valuable comments, it’s great to see other investors out there doing well.
Thanks for the comments guys.At the time I wrote the article that was the extent of the information I could find on the subject,so no specifics regrettably.I re-read the article and have realised I definitely should have emphasised what I said in the first paragraph,that although there was an increase it was just not as high as expected.Glad to hear someone is doing very well with their properties.