Flat owners in Durban enjoyed the highest growth in rental income last year, with tenants paying on average 5% more, according to the latest statistics by Rode & Associates. This compares with an increase of 2% in rental income in Johannesburg and Pretoria, while rentals in Port Elizabeth remained mainly flat. Taking into account an inflation rate of 6% over the same period, landlords haven’t experienced any growth in real terms on their rentals. Despite achieving the best performance in all major urban areas in South Africa, owners are still under significant pressure as capital gains on property rentals are expected to remain very sluggish in 2010. In the Durban metro, for example, house prices have fallen by more than 10% in 2009. Flat landlords do not have “much to be chuffed about”, as rentals continue to show lacklustre growth, Rode warned in its report. The big increase in unemployment over the past year, while job losses are continuing, households’ high debt levels and the constraints on economic growth through the energy debacle and the gloomy outlook for the world economy are all factors that contribute to the grim outlook for the property market in 2010. Some landlords will benefit from the Soccer World Cup, but this will again be mainly owners with property rentals along the beachfront and located closely to the new Moses Mabhida stadium. Landlords are warned to not cut themselves off from signing long-term rental agreements unless they have secured World Cup tenants, as they will most likely be unable to get the ludicrously high rentals they are hoping for. The hype surrounding the World Cup has led to an oversupply of short-term rentals, as many landlords keep their property out of the long-term rental market.
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