Despite a challenging year and pressure on rental growth rates, landlords in KwaZulu Natal enjoyed a good year in 2019 while tenant performance also improved according to the PayProp Annual Rental Market Report for 2019.
The allure of KZN has grown exponentially and why not? It is South Africa’s second biggest economy and there is a substantial amount of development underway. The lifestyle characterised by a laid-back sub-tropical climate and easy access to beaches is one of the big drivers of demand for property across many areas.
The KZN rental market ended the year with an average rent of R8 303, above the national average of R7 844 and still more affordable compared to Gauteng (R8 360) and the Western Cape (R9 299).
Overall, the rental market remained busy although average rental growth declined towards the latter part of the year as the economic realities kicked in. Compared to the national rental growth rate of 3.6%, KZN landlords fared somewhat better at an average growth of 4.31%.
At the same time, the average credit score of tenants in KZN improved from 641 to 643, only slightly below the national average of 645. The percentage of high-risk tenants also improved to 27% (from 28.7%) although it is slightly below the national average of 25.6%.
The average damage deposit ratio for KZN stands at 1.21, up from 1.15 the year before and now only slightly below the national average of 1.27. There was a decrease in the rent-to-income ratio to 28.4% and the rate of tenants with major delinquencies to 18.3% (from 21.4%).
The affordability is well illustrated when you consider that you can still find apartments and duplexes in complexes in the R5 500 to R8 000 price range in Queensburgh according to Michelle Vermeulen, Seeff’s licensee for the area.
Although Berea rents can range to R25 000 per month, you can still find apartments in the R4 000 to R6 000 range in areas bordering the commercial zones of Berea and Glenwood according to Roger Hoaten, Seeff licensee.
On the Mid-South Coast, the towns from Umkomaas to Pennington still offer apartments from R3 500 and freestanding homes from R 8000 according to Joleen Giraudeau, rentals manager for Seeff Hibiscus Coast.
The Richards Bay rentals market has improved in terms of demand on the back of a continuous influx of people in search of the better work opportunities offered here, says Elaine Chetty, Seeff’s licensee for the area.
For millennials and first-time renters Richards Bay offers excellent affordability with small flats away from the CBD from R5 000 per month and two-bed sectional title units from R6 000. Freestanding houses are also still available from R8 000 depending on location and property features.
Author: Gina Meintjes, 07 April 2020, Rentals