Eighteen months ago, landlords in most cities were lucky if they could pass rental increases of more than 6% to 8% on to tenants. Recent stats show that flat rentals in Jhb and Dbn are now rising at double-digit rates.

Buy-to-let investors in Johannesburg and Durban will no doubt be pleased to know that flat rentals are now rising at double-digit rates. Rentals of two bedroom units in both these cities were up 13% in fourth quarter 2007 (y-o-y), according to latest figures from property economists Rode & Associates.

Eighteen months ago, landlords in most cities were lucky if they could pass rental increases of more than 6% to 8% on to tenants. Rode's latest rental data supports the view that the rental market is finally on the rebound, with higher interest rates and stricter credit lending making renting an increasingly more affordable option than buying.

Rode's flat rental index for Pretoria rose 12% in fourth quarter 2007, while Cape Town reported more muted growth of 7%. Port Elizabeth property owners, on the other hand, saw rentals move by only 0,1% over the same time.

The Rode Report shows that double-digit growth in Johannesburg, Durban and Pretoria was driven by a shrinking pool of available flats to let. Garth Johnson, author of the Rode Report, says that residential vacancies in most SA cities are now below 5%. Vacancies in Johannesburg dropped from 2,79% in first quarter 2007 to a record low of 1,11% in fourth quarter 2007. In Pretoria only 1,27% of the city's flat rental stock is still available to rent, down from 3,49% at the beginning of 2007.

The strong performance of Johannesburg's rental market ¬- the only SA city where rental growth outperformed consumer inflation over the past two years - means that it has generally become more expensive to rent an apartment in Johannesburg than in Cape Town.

Rode's figures show that tenants are now paying an average R3 340 per month for upmarket, one bedroom flats in Johannesburg. In Cape Town, one bedroom flats of the same quality are renting at 'only' R2 690 per month. The same trend is evident for bigger units. Three bedroom apartments in Johannesburg are now available at an average R5 518 per month while three bedroom units in Cape Town are renting for around R1 000 less at R4 489 a month. - Joan Muller

Property24 03/07/2008