Will rents go up or down this year?
Are rental prices realistic23rd Mar 2022
The cost-of-living crisis is unfortunately not showing any signs of letting up. Fuel and energy prices are soaring, a basket of groceries costs a lot more and if 2021 is anything to go by, then rent is likely to increase too.
Here we explore what the rental prices will do in 2022 and offer a snapshot of a two, three, four and five-bedroom home in residential estates across the country.
The facts don’t lie
According to data from the PayProp Rental Index Annual Market Report for 2021, the last quarter of 2021 saw an increase in rental growth with the average residential rent going up by 0.8% year on year, from R7, 854 per month in 2020 to R7, 906 in 2021. This is, of course, good news for landlords, but not so much for renters.
Johette Smuts from PayProp warns: ‘Tenants should be on guard for a possible rise in interest rates which could push up rents even further.’
Change in demand due to Covid
Rents are also based on location. Properties in residential estates remain very popular for all types of renters as they offer tenants safety and security, a plethora of amenities and are typically close to shops, hospitals, and good schools.
‘People like to have the extra security of being in an estate and so are willing to pay a bit more,’ says Tasmyn Walker of Lew Geffen Sotheby’s International Realty.
Walker adds: ‘Many tenants, especially young professionals, are still working from home and have also got pets during the lockdown. So a bigger unit that has an office space and large garden or is in a pet friendly complex is often top of the list, but hard to find.’
According to Samuel Seeff of Seeff Property Group, families are generally looking for at least a three-bedroom home, which is neat and well maintained with modern finishes, a double garage and possibly even a swimming pool.
‘Estates continue to be very popular for family holiday rentals, especially those located in the northern region of the country, where you find game reserves along the coast in Mossel Bay and Knysna,’ he says.
Sharon Smit from Jawitz Properties explains that she has also seen a big demand for fully or partially furnished homes for people who are looking to rent for a few months or a year before they immigrate.
How high can it go?
As Lisa Connellan from Knight Frank explains, rental income in the first three months of 2022 has already increased but figures are not equal to what they were prior the pandemic years. So there’s still room for movement.
‘There is still a huge demand for rental properties, especially in places like the Western Cape, and we are seeing this across all types of rental properties. When there is limited available properties on the market, landlords can push up prices, but it is important that properties are priced right for the market to ensure that there is interest from prospective tenants,’ she says.
There are some properties that buck this trend though. Seeff explains that top end homes on an estate can fetch up to R80,000 per month, but this does depend on the estate. ‘For example, we just rented out a luxury home in Val de Vie last year at R390,000 per month and it was paid upfront for the year, but this was a one-of-a-kind property,’ he says.
Below is a snapshot of some of the properties currently in the rental pool:
- A 127 m², two-bedroom, two bathroom north facing apartment in The River Club Country Estate in Sandton, Johannesburg is currently marketed at R13,000 per month.
- A spacious 526m², three bedroom, two bathroom family house in Kyalami Estate, Johannesburg is currently on the market for R26,000 per month.
- A lavish four-bedroom house spanning over 1,000 m² in Zimbali Coastal Resort and Estate is currently marketed at R60,000 per month.
- A five bedroom home, with five bathrooms and three garages in The Waterfall Country Estate in Midrand, is currently on the market for R60,000 per month.
As can be seen by the snapshot, rental prices between two- and five-bedroom homes can vary widely. Only time will tell whether the demand will sustain such prices. However, as borrowing becomes more expensive, more are set to join the rental market which is likely to ensure its buoyancy.