Residential rental growth slows

National average rental increases for residential property peaked at 10.8% in October last year, then started to decline to between 8% and 10% as tenants found it increasingly difficult to pay higher rentals. The PayProp rental index, which is based on an analysis of about 2.5m transactions in South Africa, showed the weighted average national rental at the end of the first quarter of this year had increased to R5 934 from R5 867 in the fourth quarter. Louw Liebenberg, chief executive of PayProp, a leading processor of rental payments for the residential letting industry, said that in line with international trends, economic circumstances would remain tight, with landlords and tenants caught between cover and available capital. Liebenberg predicted that tenant payment profiles would deteriorate slightly this year. He said PayProp did not expect the trend to improve. He cautioned the market that tenants were under increasing pressure, which called for more in-depth screening prior to the signing of leases.

Business Report, 27 May 2014