Cape Town: Property experts in the Western Cape have said there has been a decline in the purchasing of property and an increase in rentals in the province.
TPN Credit Bureau recently conducted a comprehensive vacancy survey that revealed a significant surge in demand for residential rentals during the first quarter of 2023.
Key findings from the survey include a decrease in the national vacancy rate, reaching levels last seen in 2017. This demand-driven trend is causing rental escalations to rise, while property purchases have slowed due to high interest rates and reduced consumer confidence.
Matt Mercer and Jen Wilkins of Keller Williams Explore Atlantic said the FNB House Price index reported a decline in year-on-year annual growth.
“There are reports that buying activity has dropped, but the reason for this is more about a stock shortage and reluctant sellers waiting out the market.
“The Western Cape population has grown by about 100 000 up-country semigrants per year, many of whom are forced to rent because of the stock shortages and difficulties selling up north. Hout Bay and Blouberg are the most favoured areas for these semigrants who appreciate space and relative value,” they said.
Mercer and Wilkins said the Atlantic Seaboard, and particularly Camps Bay, also face the same challenges for wealthy buyers and tenants struggling to find places to live.
“There are signs on the horizon that the rising mortgage rates will become too much, particularly for buyers that may have extended themselves. Sellers and landlords waiting out the market may want to contemplate taking advantage of the current demand,” they said.
Waldo Marcus, head of marketing at TPN Credit Bureau, said the TPN survey found that overall, vacancies decreased 37.61% between 2021 and 2022, even taking a market adjustment post the hard lockdown in 2020 into account.
The residential rental market continued to see positive signs of growth in the first quarter of 2023 with the national vacancy rate at 6.19%, down from 8.13% in the fourth quarter of 2022. The previously strong demand for property ownership has shifted to increased demand for residential rental properties, he said.
Pieter van den Berg from Just Property said: “According to a leading property portal, there are just over 8 300 listings for properties to rent in Cape Town, including houses, apartments, town houses, and commercial and industrial properties. The vast majority of those are commercial listings. That is not enough to sustain the residential demand and we experience daily what TPN reported in Q1 2023.”
Van den Berg said for the third consecutive quarter, the Western Cape maintained the lowest vacancy rate at 1.66% as the province responded to continued high demand.
“We currently have a listing-to-enquiry ratio of 1:49. The market for tenants is very competitive! This is echoed by our colleagues at Just Property Blouberg, where their listing-to-enquiry ratio is even higher at 1:83.
“The story is a little different at Just Property Dynamic (Durbanville) where the ratio is 1:7. If you look at the number of residential rental listings on the property portals in these three areas of Cape Town, a bleak picture emerges for tenants – there are not a lot of choices and there are a lot of prospective tenants to compete with,” he said.