De­mand ex­ceeds sup­ply in rental mar­ket

The Star Early Edition - - NEWS - Roy Cokayne

VA­CAN­CIES in the res­i­den­tial prop­erty mar­ket in­creased to 6.62 per­cent in the fourth quar­ter of last year from 6.53 per­cent in the pre­vi­ous quar­ter, de­spite de­mand for rental prop­er­ties still ex­ceed­ing sup­ply.

How­ever, TPN credit bureau said it was in­ter­est­ing that va­can­cies de­clined to 3.02 per­cent in the be­low R3 000 a month rental price band and to 9.77 per­cent in the R12 000 to R25 000 a month rental bracket.

In its lat­est res­i­den­tial sec­tor va­cancy sur­vey report, TPN said over­sup­ply and qual­ity of de­mand were two ma­jor fac­tors af­fect­ing va­can­cies.

It added that a va­cant prop­erty was de­fined as a prop­erty that was un­oc­cu­pied and on the mar­ket for im­me­di­ate oc­cu­pa­tion and not held back for main­te­nance or other rea­sons.

With re­gard to over­sup­ply, TPN said its mar­ket strength in­dex pointed to a de­mand rat­ing of 76.37 per­cent ver­sus a sup­ply rat­ing of 59.54 per­cent.

TPN said this pointed to a mar­ket where de­mand for rental prop­erty was still greater than the sup­ply of rental prop­erty and there­fore va­can­cies were ex­pected to de­cline.

Turning to the qual­ity of de­mand, TPN said its ten­ant cre­dex score data pointed to an im­prove­ment in ten­ant ap­pli­ca­tions in the fourth quar­ter, be­cause of the avail­abil­ity of bet­ter qual­ity tenants.

“It there­fore makes sense that va­can­cies would also de­cline in this pe­riod.

“But it is im­por­tant to note the change in trend where the num­ber of qual­ity ten­ant ap­pli­ca­tions have started to de­te­ri­o­rate, but the num­ber of qual­ity tenants ac­tu­ally placed con­tin­ued to im­prove, which begs the ques­tion: will va­cancy rates in­crease in 2017?”

TPN said to quan­tify the rental mar­ket strength, re­spon­dents to the TPN es­tate agent and land­lord sur­vey were asked to rate sup­ply and de­mand in their area.

It said re­spon­dents sim­ply had to in­di­cate whether de­mand was strong (100), av­er­age (50) or weak (0).

TPN said na­tion­ally the TPN rental mar­ket strength in­dex was at 59.48 per­cent and con­tin­ued to ease closer to equi­lib­rium fol­low­ing a small shift from 61.47 per­cent in the pre­vi­ous quar­ter.

But TPN said the de­mand rat­ing con­tin­ued to de­cline yearon-year to 76.37 per­cent in the fourth quar­ter from 85.41 per­cent. It said this could prob­a­bly be at­trib­uted to tenants choos­ing to re­main in longer leases to cut back on costs as­so­ci­ated with mov­ing prop­er­ties and land­lords hold­ing on to qual­ity tenants even at an op­por­tu­nity cost of mu­tual rental es­ca­la­tion of 5.62 per­cent in the fourth quar­ter.

TPN said the West­ern Cape was the “best pay­ing prov­ince” and Cape Town’s de­mand rat­ing of 93.58 per­cent and more muted sup­ply rat­ing of 38.53 per­cent was stok­ing frus­tra­tion as prop­er­ties be­came more un­af­ford­able in the prov­ince.

PHOTO: SIMPHIWE MBOKAZI

Res­i­den­tial prop­erty to let. There was an im­prove­ment in ten­ant ap­pli­ca­tions in the fourth quar­ter.

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