Rentals are still too low to attract many residential investors back to the market but they are ticking up, with homes being snapped up very quickly in most areas.
FNB's first Rental Property Barometer found that rental agents are "far more upbeat" than estate agents who sell. The latter's opinions are canvassed in the FNB Residential Property Barometer - which focuses on home-buying.
Confidence levels are up relative to six months ago and there is a shortage of stock relative to demand from tenants, said John Loos, FNB Home Loans property strategist.
With more people struggling to get onto the property ladder, rental markets are on the up.
Coastal regions seem to be stronger in demand terms than Gauteng, which suggests to FNB that there is more of an affordability problem (for home buyers) on the coast than in Gauteng.
Other trends highlighted by Loos, include that:
- Examining price/income bands, rental markets towards the lower end of the market appear to be performing better. This is probably reflective of "relatively greater financial strain amongst lower income groups";
- There is not much reporting of oversupplies of rental stock;
- There has been a downward trend in gross income yields since 2000, however the yield decline was probably not as "irrational" as that of the early 1980s boom;
- First-time buyer numbers in former white suburban areas have dropped, with "an increased reluctance of some members of this group to buy" expected to support the rental market in the near term.
"The strengthening of the rental market, which appears to be in full swing, is a precursor to a recovery in the buy-to-let market, ‘although we only anticipate the latter to respond in 2009'," said Loos.
"Shortage of stock and growing demand are exactly what the doctor ordered in terms of creating the appropriate environment for an overall residential market recovery," he said.
Gross income yields per property value band |
Property value bands |
Durban |
PE |
Cape Town |
Pretoria |
Joburg East |
Joburg West |
Joburg South |
Joburg North |
Avg |
Less than 500k |
6.9 |
8.7 |
8.4 |
9.2 |
9.7 |
11.5 |
9.0 |
-* |
9.5 |
R500 - R700 |
6.9 |
8.2 |
7.9 |
8.3 |
7.9 |
10.3 |
7.9 |
8.0 |
8.3 |
R700 - R1m |
6.8 |
6.7 |
6.9 |
6.4 |
7.9 |
9.6 |
7.2 |
8.7 |
7.2 |
R1m - R1,5m |
6.5 |
6.3 |
5.9 |
6.9 |
8.4 |
7.0 |
8.1 |
7.5 |
7.0 |
> R1,5m |
5.7 |
6.0 |
5.5 |
6.3 |
5.7 |
4.0 |
5.8 |
8.3 |
6.5 |
Average |
6.6 |
7.3 |
7.1 |
7.7 |
8.1 |
11.0 |
8.5 |
8.2 |
8.1 |
* Insufficient respondents in this price category |
How long do rental properties stay vacant? |
|
Total |
Joburg |
Pretoria |
CT |
Durban |
PE |
Upper income |
Middle income |
Lower income |
Less than 1 month |
75% |
62% |
70% |
93% |
90% |
85% |
68% |
76% |
82% |
1 - 2 months |
23% |
35% |
23% |
7% |
10% |
15% |
25% |
23% |
18% |
3 - 6 months |
2% |
3% |
7% |
0% |
0% |
0% |
7% |
1% |
0% |
How would you rate the available stock relative to demand? |
|
Total |
Joburg |
Pretoria |
CT |
Durban |
PE |
Upper income |
Middle income |
Lower income |
Extreme oversupply |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
0% |
Mild oversupply |
3% |
5% |
0% |
3% |
0% |
5% |
5% |
3% |
0% |
In balance |
15% |
18% |
13% |
10% |
17% |
5% |
26% |
12% |
14% |
Mild shortage |
38% |
39% |
70% |
27% |
24% |
25% |
49% |
35% |
36% |
Extreme shortage |
44% |
38% |
17% |
60% |
59% |
65% |
20% |
50% |
50% |
Realeastateweb 2008/03/06 |
