Property market outlook remains weak due to credit crunch

inflation in this sector.

Flat rentals nationally also remain rather flat.

“This is no surprise, in light of the persistent financial pressure that many households are under,” says Rode.

In the second quarter of this year, nominal market rentals on flats grew by 5 percent and on houses by 4 percent, whereas market rentals on townhouses posted growth of only 3 percent.

With consumer inflation (excluding housing) of about 6 percent, this implies that in real terms residential rentals are still contracting.

Regionally, flat rentals in Cape Town ( at 5 percent) showed the strongest growth. Durban followed with rental growth of 2 percent and in Joburg and Pretoria, rentals were only marginally higher, rising by 1 percent.

Another key finding is the mediocre growth in the market rentals of office space.

In the second quarter of this year, office rentals in Joburg and Cape Town decentralised, on average, showed growth of 6 percent, and in Pretoria decentralised rentals were up by 5 percent. Durban decentralised was able to muster growth of only 4 percent.

“There is still no marked improvement in overall office vacancy rates,” Rode says.

“This should be expected given the lacklustre demand for office space in the wake of weak growth in the services sector of the economy, not to mention lack of business confidence. Naturally, the outcome of this has been mediocre growth in market rentals.”

Regarding the industrial property market, until there are sustained improvements in the manufacturing and retail sectors, no magic should be expected from the industrial property market, says Rode.

During the quarter under review, rentals in the industrial agglomerations of Durban and Port Elizabeth showed the strongest growth (9 percent).

On the Central Witwatersrand industrial rentals were up by 5 percent and on the East Rand by 0.4 percent.

I n t he Cape Peninsula rentals contracted by 1 percent.

Over the same period, building costs are expected to have shown growth of roughly 11 percent.

This implies that in all of the mentioned areas rentals contracted in real terms.