Real Estate Investor Magazine South Africa October 2014 | Page 23

REI RESIDENTIAL
REI RESIDENTIAL

FROM BUYERS’ PARADISE
TO SELLERS’ MARKET

W

hy has housing transformed from a buyers’ paradise into a sellers’
market? Dr Andrew Golding, CE of the Pam Golding Property group
explains that the improving trend has been due to a combination
of factors. These include the gradual accumulation of pent-up demand,
dramatic demographical changes, a weakening currency which encourages
consumers to seek what they perceive to be more solid investments (linked
to profit-taking in the equities markets realised into property), and a return
of confidence.
A relatively recent factor has been greater access to bond finance,
reflected in both numbers of sales and values. A new, relatively wealthy
middle class has also brought about another factor which impacts on their
spending power – access to credit. This alone has had a major impact on the
growth in the residential property market. Brisk sales have led to a shortage
of stock and a situation where buyers are chasing sellers.
Will this situation last? The rapid spread of urbanisation, with twothirds of South Africa’s population now living in urban areas, is closely
linked to the demand for homes. The most rapid growth has taken place
in smaller cities with Gauteng having the largest and fastest-growing
population, double the national average. This explosion of urbanisation and
the increasing numbers and earning powers of South Africa’s previously
disadvantaged citizens is helping to swell the growth we are currently seeing
in the residential property market. These patterns are set to continue and
in doing so will surely underpin the sustainability of the property market.
Bill Rawson
Chairman
Rawson Property Group
Property should comprise at least 30% of an asset
portfolio. The advantage of a property investment
is that it is relatively straight-forward: the risks are
more easily understood and assessed. Property
investments can also be geared with bank finance,
while in major urban areas demand from tenants
now exceeds supply, ensuring the investor of ongoing
leases.

Michael Bauer
Managing Director
IHPC estate agency
The key for all landlords is not to buy property at too
high a price because you will be under pressure to
charge higher rentals to make a reasonable return.
Don’t price yourself out of the market by charging
too high a rental and maintain and upgrade your
property to stay competitive with your operating
expenses.
www.reimag.co.za

EXPERT Q&A

Managing risk with
rental insurance
Harry van der Linde
Leapfrog Pretoria East
What are the main risks for landlords and
tenants?

When it comes to rentals, we agents most often have
to deal with issues surrounding security deposits and
non-payment of rent. Landlords face the risk of nonpayment by tenants, as well as property damage
and even theft. Tenants can fall prey to unscrupulous
owners who don’t do proper maintenance or illegally
hold on to security deposits. Added to this, tenants are
often asked for two or even three month deposits –
something many South Africans struggle to gather. As
with any contract, both parties stand a lot to gain, but
also face certain financial risks which can be mitigated
by offering ‘zero deposit’ leases and financial
protection for landlords.
How does it work for property owners?

Rentshield is a product of Torus Capital and offers
landlords a number of free services such as an
online tenant vetting facility and conducting property
inspections. They protect the landlord in terms of nonpayment by the tenant for up to three months as well
as repairing property damage caused by the tenant
(up to the value of one month’s rental). The company
will also undertake an eviction process, if necessary,
covering the legal fees to the value of R50 000.
How does it work for tenants?

The main benefit for tenants who qualify for Rentshield
is the ‘zero deposit’ rental option offered, which keeps
the rental option affordable and attractive for their
tenants. For this reason, zero deposit leases are rapidly
gaining favour.

October 2014 SA Real Estate Investor

23