Rents are high, and city’s rents are ris­ing faster than else­where in the world

Weekend Argus (Saturday Edition) - - PROPERTY - BONNY FOURIE

LOW CON­FI­DENCE lev­els and short­age of money are see­ing in­creased de­mand for ren­tal prop­er­ties across the coun­try, de­spite statis­tics show­ing that the av­er­age na­tional rent is at its high­est yet.

And in Cape Town, the rate of ren­tal in­creases is the high­est in the world.

The PayProp Ren­tal In­dex, which out­lines res­i­den­tial ren­tal trends on a quar­terly ba­sis, re­ported in the past quar­ter that the weighted av­er­age na­tional rent had ex­ceeded R7 000 for the first time. It also said the West­ern Cape was the most ex­pen­sive prov­ince in which to live.

The coun­try’s gross domes- Jo­hette Smuts, and that means the av­er­age per­son “is just get­ting poorer”.

“It doesn’t help that our un­em­ploy­ment rate is at its high­est in 12 years. The truth is, liv­ing stan­dards can’t im­prove with­out eco­nomic growth.”

The weighted na­tional ren­tal av­er­age for the sec­ond quar­ter of this year was R7 080.

“The West­ern Cape is the only prov­ince with a slight up­ward trend over the past four quar­ters. Once again it is the most ex­pen­sive prov­ince to live in as it at­tracts the high­est rents.

“This prov­ince is see­ing a ‘sem­i­gra­tory’ in­flux of peo­ple from other prov­inces, es­pe­cially Gaut­eng, which has in­creased de­mand.”

But Smuts says a down­ward trend has been tracked in the Eastern Cape, Free State and KwaZulu-Na­tal.

Glob­ally, prime res­i­den­tial rents are strug­gling to achieve growth, with the Knight Frank Prime Global Ren­tal In­dex, which tracks luxury res­i­den­tial rents across 17 cities, record­ing an­nual growth of 0.5% in the year to March 2017.

The num­ber of cities where prime rents have in­creased an­nu­ally rose from six in the first quar­ter of last year to 12 in the first quar­ter of this year.

“Yet the gen­eral trend has been for steady, rather than spec­tac­u­lar growth.

“Cape Town leads the rank­ings with rents ris­ing by 5.9% in the year to the end of the first quar­ter of 2017. Growth has been un­der­pinned by strong mi­gra­tion into Cape Town with po­ten­tial buy­ers choos­ing to rent be­fore com­mit­ting to pur­chas­ing.”

The re­port says prime rents in Nairobi fell by 6.2% in the year to March, and bud­get cuts by in­ter­na­tional firms ham­pered ex­pat de­mand for prime ren­tal prop­er­ties.

In Lon­don, prime rents con­tinue to bot­tom out, with the an­nual rate of falls slow­ing to -4.9% to March 2017.

“Un­cer­tainty in the sales mar­ket fol­low­ing a se­ries of tax hikes has led to an in­creased sup­ply of ren­tal prop­er­ties. How­ever, this trend is start­ing to ease.”

In some of the top fi­nan­cial cen­tres, there has been di­ver­gence in the per­for­mance of prime rents, the re­port found.

“An­nual ren­tal val­ues fell in New York (1.2%) and Sin­ga­pore (2.3%), whereas Zurich and Hong Kong recorded a rise year-on-year of 5.1% and 0.6% re­spec­tively over the year to March 2017.

“Global eco­nomic sen­ti­ment re­mains cau­tiously up­beat.

“The lat­est in­di­ca­tors show low un­em­ploy­ment in the US, pos­i­tive eco­nomic growth in ev­ery Euro­pean coun­try, and the growth rate in Asia re­mains ro­bust. This may spur ad­di­tional busi­ness in­vest­ment, in­creased re­lo­ca­tion bud­gets and ul­ti­mately an in­crease in de­mand for ren­tal ac­com­mo­da­tion around the world.”

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