After many years of recording double-digit growth in rental incomes, owners with property to rent in Pretoria will have to tread carefully as rentals remain under pressure in the capital city. According to the latest statistics by Rode & Associates, rental income in Pretoria showed no growth in 2009. The rental market in Pretoria, as well as Port Elizabeth, performed the worst of all major urban areas in South Africa, with Durban managing to achieve growth of 5% and Johannesburg and Cape Town showing increases of 2%. While Pretoria has long been a favourite of buy-to-let investors, with many students, government employees and embassy staff looking for property to rent in central areas such as Arcadia, Hatfield and Sunnyside, potential buyers should think carefully before investing in the buy-to-let market. The latest research by First National Bank notes that on average, only 60% of monthly mortgage repayments on buy-to-let properties were generally covered by rental returns. These low income yields, coupled with the fact that rental income is showing hardly any growth and the fact that property values are only predicted to increase this year by a maximum of 8%, hardly beating inflation, means that now is not the best time to invest in the buy-to-let market, the experts warn. The cost of credit compared to the current capital growth on housing simply doesn’t offer good potential returns. It is also unlikely that owners with property to rent in Pretoria will cash in significantly on the World Cup, as it is not a popular tourist destination and tourists are more likely to spend time in Cape Town or Durban. However, with six of the ten stadiums located relatively closely to Gauteng, a significant number of the more than 350 000 expected tourists are likely to spend some time in Johannesburg and Pretoria and might look for property to rent.
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