Interest rate cut also good news for the rental market
Category Rentals
The improved economic outlook, boosted by the recent 25bps interest rate cut is also good news for the rental market and bodes positive for rental property owners and landlords. It supports the sustainability of the rental sector, and enables improved investment yields for property owners and landlords.
The high interest rate of the last 18-months impacted tenants and their ability to pay higher rents. This came just as the market had recovered from the lows of the pandemic period where landlords were seeing little to no increases in their rental income. Just as the market was picking up, international geopolitical pressure resulted in rising inflation, a weakening of the Rand and higher fuel prices. This permeated in rapid interest rate hikes, effectively taking the rate above the pre-pandemic level.
Naturally, this impacted tenants and many landlords. While the Southern Suburbs and Constantiaberg rental markets have remained resilient, it did mean that rental growth had come under pressure. The good news is that the recent PayProp Report shows that the rental market is gaining strength as the country's economic outlook improves with the benefits of the Government of National Unity (GNU) filtering through. According to the rental barometer, the Cape rental market enjoyed particularly good growth by mid-year of around 9.7% YoY, and showed the fastest acceleration since December 2017.
The recent rate cut, lower inflation and the declining fuel price is putting more money back into consumer pockets which means tenants have a bit more to spend on their monthly rental costs. A recent Lightstone report also pointed out that Cape Town continues to see the largest influx of people moving from other provinces, and that those who are moving tend to spend more on properties.
Those who semigrate from elsewhere often look to rent before they decide to buy which is good news for landlords. We also anticipate a pick-up in demand as we head into the busier period when people need to either move into a rental, upgrade or downgrade. The latter part of the year and into the early part of next year is also usually when new entrants come into the rental market.
A reminder that a well-maintained property and good tenant relations will always go a long way to making a rental property more attractive while tenants will be more motivated to pay a higher rental.
The best way to ensure your rental property is not only occupied by a good caliber tenant, but can optimise the returns from your rental investment, is to work with a local agent with a proven track record of rental success. An experienced agent would know exactly what tenants would be looking for, and can provide an honest assessment of the property, point out any areas which need attention, and provide the right guidance on rental rates based on actual successful rental concluded.
Seeff is a leading rental agency across the Southern Suburbs and Constantiaberg area. Our services and systems are top class and aim to take the stress out of rentals so that property owners and landlords can enjoy their asset, and earn a good return. We stand ready to assist with your rental needs. If you would like to know more, please feel free to contact us at any time!
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Author: Gina Meintjes
