Northern Cape rental goes through the roof

LIMITED rental stock and an “oversupply of out-of-town tenants” attracted by fracking, mining and construction of Eskom’s Medupi power station have driven residential rentals in the Northern Cape, Limpopo and Mpumalanga significantly higher than the national average.

Credit bureau TPN said the average national rental price was R5 620 in the fourth quarter of last year.

However, the average rental in the Northern Cape was R6 306, which is 12 percent higher than the average national rental, and R6 087 in Limpopo, which has increased 8.3 percent and R6 042 in Mpumalanga, up 7.5 percent said TPN in its latest rental payment monitor.

TPN added that the Western Cape (R5 952) and Gauteng (R5 930) also achieved average monthly rentals higher than the national average but rentals in KwaZulu-Natal (R5 516), North West (R5 052), Free State at R4 877 and the Eastern Cape at R4 818 were all below the national average.

National average rental escalations declined to 6.49 percent in the fourth quarter of last year from a peak of 8.6 percent in the corresponding quarter in 2013.

TPN said that the Northern Cape at 15.42 percent and Free State at 13.14 percent recorded double-digit rental escalations.

Although Limpopo still commanded top spot in terms of average rental prices, the province only achieved an average escalation of 0.82 percent in the fourth quarter.

TPN said this possibly indicated a cooling off from double-digit growth in the previous five quarters. Rental escalations were muted in most of the other provinces, such as the Western Cape (3.43 percent), Gauteng (5.65 percent) and KwaZulu-Natal (2.44 percent).

Escalations in the Eastern Cape at 9.57 percent were driven higher by limited rental stock in East London, TPN said.

The number of tenants in good standing in the fourth quarter was unchanged from the previous two quarters at 86 percent.

TPN said this overall picture still constituted good news for the industry because the good standing level achieved over the past three quarters remained the highest on record.

increase is higher than the average national rental.

Tenants in good standing are a combination of tenants in the “paid on time” category, in the “grace period” and the “paid late” categories.

But TPN said there was a slight shift in the underlying good standing categories, with a fall in the rent “paid on time” category by two percentage points to 71 percent. It said this resulted from more tenants paying late, with 5 percent making grace payments and 10 percent paying later, a one percentage point increase in both of these categories from the previous quarter.

The bureau said 9 percent of tenants made a partial payment, and 5 percent of tenants were in the “did not pay” category. It said the percentage of tenants renting premises for less than R7 000 a month declined year-on-year to 83 percent in the fourth quarter from 86 percent.