The shortage of rental properties in relation to demand is seeing many Cape Town renters digging deeper into their pockets to rent in certain areas while others are settling for their second choice of suburb.
"The squeeze on mortgage finance over the last three years has resulted in pent-up demand which is driving rental prices upwards," says Francois Venter, director of Jawitz Properties. Mortgage criteria are much stricter than during the last property boom, and buyers are battling to save for a deposit and transfer costs because of escalating living costs. "The environment is particularly challenging for first-time buyers."
Whereas 12 months ago a two bedroom apartment on the Atlantic Seaboard rented for about R7500 per month, now the figure is closer to R8500 or even R9000.
"There’s a huge demand for two bedroom flats priced at R7500, but simply not enough supply. Those that are available typically have poor quality finishes, no balcony and no parking." A three bedroom unit with two bathrooms now costs up to R12 000 per month or even R15 000 if it comes with a sea view and parking.
Apartments in the City Bowl are similarly priced, Venter says.
In the southern suburbs apartments are less expensive particularly in Claremont, Kenilworth and Rondebosch where two bedroom apartments go for about R5000 and three bedroom units rent from R6500 up.
"Affordability is key," Venter says. "With the exception of areas like Constantia and Bishop’s Court, R10 000 per month is about the maximum the market will bear for most southern suburb apartments."
Another factor driving the lack of supply is tenants opting to stay where they are for longer to avoid the higher rent they’d have to pay if they moved and had to sign a new lease. On the demand side, a trend is the number of homeowners who, unable to meet their monthly living costs, are selling their homes and turning to the rental market for accommodation.
To cope with the high level of interest in properties, agents are doing block viewings when a property comes on the market. Owners are able to cherry-pick their tenants as anywhere from 20 to 30 prospective tenants turn up. The average time a property stays on the market is a week to ten days.
"The only reason a decent property stays on the market longer is if it’s priced beyond affordability levels."
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