City’s rental apartment market takes a dip

EMPTY rental apartments are putting a damper on the Cape Town property market with a more than 50% growth in vacancies.

According to a recent report released by Pam Golding Properties, Cape Town’s property is experiencing something of an “all-time high” – 7% of all rental apartments in the city are empty, which is much higher than the 1% – 3% this figure usually hovers around. According to the group, the year began on an optimistic note, with high expectations of a positive economic outlook as a result of Cyril Ramaphosa’s election as South Africa’s new president. However, as the full extent of the economic cost and fallout from years of state capture became apparent, business and consumer confidence slumped.

While the Western Cape still outperformed most other markets, Pam Golding noted it was driven at the expense of other markets, rather than local organic growth.

“The areas of growth in the market now are not necessarily the well-established high-end suburbs but currently the more affordable areas which are not out of the reach of South Africa’s numerous less affluent buyers,” it said.

This trend can be seen in several areas – including unit sales in the Western Cape, a figure which is on a downward trend, as well as a drop in house price inflation.

During the 12-month period under review, Western Cape sales accounted for 24.8% of total sales. The impact of semi-gration – a term meaning that individuals and/or families move to a different part of a country for a better lifestyle rather than emigrating – on total sales is evident, Pam Golding said, with the Cape accounting for an increasing percentage of total sales between 2013 and 2016 when it rose from 20% to about 30%. It has since declined to around 25% – perhaps reflecting the impact of the drought and the deterioration in affordability, the group said.

Smook Property broker Rob Vanlierde said: “The increase in empty rental apartments has to do with a number of factors. There have been a lot of new apartments built in the city in the last four years which has led to an oversupply of available accommodation at the higher end of the market. These flats are not affordable for the majority of the population at the moment. Cape Town previously had a huge influx of people moving down from Joburg and a few from overseas. The drought we had last year caused many people to stay away.”

He said Ramaphosa becoming the president led to people feeling that Johannesburg which was being run poorly previously, will be run better in future.

According to Seeff rental manager Natalie Muller, the property market has seen exceptionally high rental increases over the past five years. “This has been well above between 8-10% and there has to be a market adjustment to correct that. Things have to be more aligned to the consumer price index. Property standing empty is because they have been outpriced.”

Property standing empty is because they have been outpriced

Natalie Muller SEEFF RENTAL MANAGER