Impact of Covid-19 pandemic reflected in latest Payprop Rental Index
The PayProp Rental Index for the second quarter of 2020 reflects the first clear indication of the effects of lockdown on rent levels, rental growth and arrears in South Africa. The data shows sub-inflationary rental growth rates for April, May and June at 2.3%, 1.1% and 1.6% respectively (year on year). This is despite inflation dipping to its lowest level in years.
According to PayProp head of data and analytics Johette Smuts, affordability has been an important driving force behind the dramatic slowdown due to loss of income from pandemic-related redundancies. “Many tenants have taken a reduction in their monthly income or lost their source of income completely, forcing them to reassess their rental situation or to downscale,” says Smuts.
Another key factor negatively influencing long-term rental growth is the return of properties that were previously let to the tourism market via short-term letting platforms like Airbnb. “With the travel restrictions, owners have been flooding the long-term rental market with these properties, thereby suppressing prices,” she says.
Post Covid-19: How the property market will potentially evolve
In a recent webinar on ‘Exploring post-Covid-19 property trends in South Africa’, Associate Professor Francois Viruly, University of Cape Town’s (UCT) head of the Urban Real Estate Research Unit, looked at the longer-term trends in the country’s property market…
27 Aug 2020
Provincial results
Provincially, the year-on-year rental growth rate declined from Q1 to Q2 in all but two provinces. In the North West, rental growth measured 3.9% in Q2, compared to 3.8% in Q1, and in the Northern Cape, growth of 3.7% was measured in Q2 vs 3.6% in Q1.
Property investment – to sell or not to sellEvery investor will at some point be confronted with making a decision on whether or not to sell a long-term asset such as a property, says Praven Subbramoney, CEO of Private Bank Lending at FNB… 5 Aug 2020 Where to from hereAt 2.1% year-on-year, inflation reached its lowest point since September 2004 in May 2020. “Inflation figures over the second quarter were the lowest in 15 years, fuelled by a drop-off in demand from consumers, who were likely bracing themselves for tough times ahead and facing increased affordability issues,” says Smuts. “The damaging effect of Covid-19 on the rental market is clear, as was to be expected. Rental growth over the last quarter was extremely low, and we don’t expect it to pick up anytime soon,” says Smuts. Download the full index here. Source: bizcommunity.com
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