As macro and micro economic factors influence the local economy, some sectors may be more susceptible to others and cyclical fluctuations occur on a more frequent and volatile basis. There is no hiding from the fact that South Africans are under immense financial strains, with fuel predicted to increase again next month.
From an investment perspective however, property is usually your safest bet and often withstands these short term pressures. But how does your home’s value respond to these movements?
Often we see in the rentals market how landlords automatically want to increase rentals on an annual basis as a given. Usually, in normal growth periods of an economy, this trend can be implemented on a regular basis. However, only if the value of the home can maintain its own value growth and is consistent with market value.
This year we’ve seen, especially in Cape Town, a definite decline in the rental value of homes. Countless landlords are being forced to reduce rental prices against last year’s prices purely on demand and value understanding. The market has been under serious strain and as the economy applies more pressure on the consumer and the man on the street has to reduce expendable income, demand for home’s in certain ranges are decreased.
That is why it is so important to partner with a rental agent that has a lot of insight into the trends and movements of their service regions. The guidance of an in tune agent with a finger on the pulse of the property market can provide invaluable information into price versus value as well reconciling the two. Expert advice will make all the difference when locating tenants for your home.
Do your own research too. Monitor the rental activities in your area and try and gauge the happy medium. Armed with information your decision will be far more accurate and success will be easier to achieve.
Rental Operations Manager
Harcourts Maynard Burgoyne