what returns they can get on long-term rental properties, especially in the winter months,” she says. She believes the market has become overpriced.
Samuel Seeff, chairman of the Seeff Property Group, voices a similar sentiment.
He says Cape Town’s rental premium of up to 20% (and more in some areas) above most other cities is likely to come under pressure, especially at the top end.
“Where R80,000/month seemed a high rate just two years ago, top-end homes in Clifton are now commanding up to R150,000-R170,000/ month,” he says. “Whether this will be sustainable in the current weak economic climate is questionable.” The latest rental index released by rental processing firm Payprop confirms that the Western Cape is now SA’S most expensive province in which to rent a residential property, at an average R8,231/month.
That is 75% more than SA’S cheapest province, North West, where the average home is let for R4,681/month. Until mid2016, the Northern Cape was the country’s priciest province in terms of rentals on the back of a huge supply shortage.
Payprop data shows that rentals across SA rose by 7.62% in the first quarter, up slightly from 6.25% recorded a year earlier.
Johette Smuts, head of data and analytics at Payprop, says the uptick has been driven by a still strong Western Cape as well as Gauteng, where there has been an increase of almost 10% in the first quarter.
Smuts says Gauteng’s rebound, from levels below 6% in 2016, is unexpected, seeing how lacklustre the province’s rental growth has been.
However, she notes it’s still too early to say whether its rental growth recovery is sustainable.
/month on the Atlantic seaboard
Where R80,000/month seemed a high rate just two years ago, top-end homes in Clifton are now commanding up to R150,000 to R170,000/month. Whether this will be sustainable in the current weak economic climate is questionable Samuel Seeff