KZN rental market on revival path

2008-03-26 00:00

The residential rental market in KwaZulu-Natal appears to be in the midst of a revival amid waning activity levels in the general property market due to higher interest rates, the National Credit Act (NCA) and diminishing consumer affordability levels.

A survey of letting estate agents — which gained an insight into their take on the residential rental market — revealed that this market is currently far more upbeat than the buyers’ market.

According to the FNB report “State of the Kingdom: Encouraging signs coming from the Durban rental market”, an activity level rating of 8,6 (denoting “very active”) was recorded, in contrast to the “lacklustre” Durban residential buying/selling market, which recorded a January activity level of only 5,7.

About 73% of the respondents reported either “slightly higher” or “much higher” activity levels versus activity levels experienced in 2007.

Rob Dubois, principal of Just Letting, which operates in Pietermaritzburg and the KZN Midlands, told The Witness that they have experienced a definite upswing in the rental market.

He said activity levels have increased by about 25% compared with last year.

He said the factors influencing the trend include the NCA, adding that many residents are experiencing difficulties in meeting their monthly bond repayments in the wake of higher interest rates.

This leads to them having to turn to the rental market, he explained.

Dubois said a significant number of out-of-town clients are settling in Pietermaritzburg. These “new residents” work in both the public and private sector.

Sharryn Middleton, finance and rental department manager at RE/MAX Midlands, said they foresee that buy-to-let investors are once again going to become more active in the market, due to high demand for housing in the city.

She noted that they have found a slight increase in the number of people looking to rent, adding that the increase has not yet been very significant.

“It is obviously more affordable to rent than to pay a bond, and securing a rental property is significantly easier than securing a bond,” said Middleton.

“This is all part of improving the fundamentals of property, and preparation of the overall sector for the recovery that we anticipate as soon as we have more convincing signs that interest rates have peaked,” argued Erras Lintvelt, regional manager of FNB KZN’s Home Loans Division.

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