Rental rates under pressure, but area dependent

While rental rates are feeling the pressure of the economic decline, especially at the top end of the market, they are expected to come down by about 10% on average to as much as 25% for high-end properties.

This is, however, highly area dependent and it is best to consult with a local area expert according to Seeff’s rental agents.

The Sandton area is, for example, only anticipating a decline of about 10% according to Rochelle Holland, a rental agent with Seeff. Rates are already down by 10% to 15% over the last two years across most price bands and she says that tenants can find good value in the rental market. Stock levels are expected to increase, but some cash-strapped landlords may also be looking to offload their investment properties.

Sonya Garisch and Jacqui Bush, Seeff’s top performing rental agents note that the top end of the market in the Constantia area may also see rates come down by about 10%, but could be as much as 25% for high-end properties. They also expect an increase in stock levels, including from some sellers who may be forced to rent their properties in preference to selling at a loss.

Examples of price declines include a furnished luxury security estate home which was reduced from R110 000 to R80 000 per month and an unfurnished home from R75 000 to R62 000 per month. A furnished townhouse in a security estate was reduced from R38 000 to R30 000 while a four-bed luxury home in Tokai reduced from R38 000 to R32 000.

The upper end of the market on the Atlantic Seaboard could see some rates come down by up to 20% this year, according Seeff’s rental agent, Barbra-Ann Briner. When added to the 20%-30% decline since two years ago, rates are practically halved from the peaks of 2016.

It is a fantastic time to rent here and enjoy the lifestyle for far less than what you could possibly buy for. Stock levels are increasing with loads of Airbnb stock coming onto the market as well as homes that are not selling, she says. For example, we recently rented out a luxury house in Top Road in Fresnaye for R75 000 per month compared to R100 000 per month 18 months ago.

Samantha Murphy, a rentals agent for Seeff City Bowl says that there is much more stock on the market with many properties offering similar rental specs at competitive asking prices, which puts landlords under pressure. There is also more movement in the market with tenants needing to downgrade for financial reasons. Here, a fully furnished two-bed home in Higgovale, where a tenant was paying R50 000 per month, became available on the 1st July at a drastically reduced rental of R30 000 per month.

The Hout Bay rental market is seeing pressure above the R35 000 per month range, says Janine van Heerden, rentals manager for Seeff. We expect a further level of pressure on rates due to a lack of tenants qualifying and breaking their leases. Surplus stock will also drive prices down further. We have for example seen a three-bed townhouse rental drop from R20 000 to R16 000 per month and a four-bed house from R33 000 to R22 000.

Brackenfell rentals may also see a decline by 10% to 15%, says Krishca du Toit, an intern agent with Seeff. Stock levels are higher, but so is demand as more people will turn to the rental market to mitigate the financial pressure. For example, a two-bed apartment which rented out for R7 200 two years ago, now goes for R6 400 per month.

Langebaan on the West Coast may also see a 10% to 20% decline, says Mariska le Roux, a rental agent for Seeff Langebaan. Stock levels are increasing, and we expect more stock from properties which are not selling. For example, you can now rent a furnished two-bed unit for R7 500 per month, down from a previous R9 000 and a luxury four-bed home in a desirable location for R15 000 per month compared to a previous R18 000.