Rental now 'the preferred way to live'

The rental market in Durban is in a state of flux as buy-to-let investors consider whether to hold or sell their properties on the promise of prices picking up.

This is the word from Cheryl de Marigny, operations manager at Just Letting. She was responding to an article about the UK becoming a nation of tenants, because mortgages are hard to come by and property prices have outstripped wage increases.

In South Africa, De Marigny said, the yoyo effect of interest rates had had a severe impact on the market.

When interest rates reached 25 percent in 1998, the property market overheated. The market recovered and then bottomed again two years ago with the global credit crunch.

Looking at the market now, De Marigny said, rentals had become the preferred choice, especially as prospective buyers watched what would happen with new bank lending criteria.

"The average purchaser was not willing to participate in the relatively high interest rate cycle, while at the same time the banks declined mortgage applications, and clamped down on 100 percent bonds.

"Landlords did not wish to offload their properties at reduced prices and tenants were not keen to commit to a purchase when they were unsure of job stability."

De Marigny said most South Africans did not have the onerous deposits required by banks, which favoured the rental market.

But, she said there had been a slow-down in rentals in KZN in recent months, despite the general demand for rental property.

"Many landlords are holding their properties back from renewing their long-term leases in expectation of higher value short-term rentals during the soccer, as well as the hope of off-loading their properties at reasonable value now that there is a buzz in the sales industry again."

She said average house rentals varied from R6 200 in Hillcrest to R3 800 in Pietermaritzburg, R4 700 in Queensburgh, R5 800 in Umhlanga, and R4 200 in Richards Bay.

Property Guide (Sunday Tribune)

Posted at 09:50AM Mar 01, 2010 by Editor in Residential  |  Comments[1]