Do tenants now have the upper hand in Cape Town?
The rental market in Cape Town is in a state of flux at the moment, and tenants are possibly in a better position in terms of value for money and the choice available to them, than ever before according to Michael Bauer, managing director of property company SAProperty.com, who says this could be for various reasons.
The reason first being that many investors bought property purely to rent out as short-term lets because of the rising popularity of Airbnb or other DIY holiday accommodation websites, but have since realised that it’s not as easy to make money off this type of rental than it first was made out to be.
Short-term lets often create a high volume of administrative work and are higher risk than long-term lets. It also highly depends on the number of tourists in the Mother City.
Why South Africans are increasingly opting for smaller homes
One thing is certain, apart from the overall inflationary impact, the spiralling cost of fuel directly impacts on the demand for conveniently situated, sectional title property in key economic hubs - close to the workplace, schools and all amenities.
This is according to Dr Andrew Golding, chief executive of the Pam Golding Property group, who says, “due to rising global oil prices, this month (March) sees yet another significant rise in the price of fuel, while next month (April) there will be further increases as announced in the National Budget in the general fuel levy and Road Accident Fund levy, and in June motorists will have to cough up even more at the pumps as a new, additional tax - a carbon tax - takes effect”.
Want a home loan? Check your credit report includes rental payments
Most home buyers are aware that a good credit score is a vital part of being approved for a home loan - and that this score is based mostly on their history of paying their bills in full and on time.
What many of those who are currently still tenants don’t know, however, is that their rental payment history is not automatically reported to the credit bureaux that compile their credit scores. “And with rent being a major monthly expense, the omission of that history could well cost them their dream home one day,” says Rudi Botha, CEO of BetterBond, national bond originator.
“Recent research by one of the biggest credit bureaux found that only about 50% of tenants’ rental histories were being reported - and that the credit scores of 80% of tenants improved when rental payment records were included in the calculations,” he notes.
Millennials, invest in property as soon as you can
Often repeated statements in South Africa’s property media, drawing attention to the increased difficulties that young middle-class South Africans now experience in becoming homeowners, have been forcefully corroborated by statistics recently published by the property analysts, Lightstone.
This is according to Rowan Alexander, Director of Alexander Swart Property, who says the report establishes that millennials will probably have to pay 3.04 times more on their first home purchase than the generation before them.
Lightstone attributes this huge discrepancy mainly to the effects of property price inflation over the last two decades, which in real terms has steadily reduced consumers’ spending powers. But the situation has not been helped by the now documented fact that millennials, having never before now lived in difficult economic times and have had a tendency to succumb to the ‘instant gratification/I want it now’ mindset, says Alexander.