PROPERTY: Rentals Are Rising Again
Recent Western Cape Business News
Rents for property managed by Trafalgar, SA’s biggest residential property manager and letting agency, are continuing to rise steadily. The Trafalgar national rental index rose 7% in the nine months to March 2010 --- an annualised 9,5%. This is less than the 11,2% increase for the year to June 2009 and the six year annual trend of 10% since the company started the index in 2003.
“Once again property is showing its steady, compound returns for investors,” says Trafalgar CEO Andrew Schaefer. “The latest index covers the worst recession South Africans have experienced since the 1980s, yet on average rents rose in all cities.”
But increases in Kwazulu Natal and Johannesburg rose less than inflation – at 4,25% and 4,8% -- while East London continued outperforming the rest of Sa at 14, 3%. The East London index stands at 210 from a base of 100 in 2003, a compound rental growth of 13% a year over the six years. The national index was at 174 in March 2010. Cape Town is the laggard at 169, just behind Johannesburg’s 170.
“Households that would normally buy have been forced by poor affordability and high household debt to rent rather than buy,” says Schaefer. “and this has underpinned the rental market. We have few empty flats in our portfolio.”
The Trafalgar rental index measures the longitudinal increase in rents of the same unfurnished 2 bedroom flats, across a range of suburbs, in each of the cities concerned over the period December 2003 to March 2010. A sample of approximately 50 flats has been tracked for each location.
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