Residential rental market could surge.
Category Rental Property
The recent 50 basis points increase in interest rates, could place pressure on some buyers and homeowners in the residential property space, and result in a surge of demand for rental properties, says Francois Venter, Director of Jawitz Properties. “This may also lead to higher rents.”
“Some homeowners may look to renting out their properties to make ends meet and move into smaller properties,” Venter says. “While costs continue to rise, renting may also be the only option for many prospective buyers.”
In addition, the recent interest increase shows that the interest rate cycle has bottomed out and the only way forward is up, says Venter. This can make banks tighten their lending criteria, making it even harder for buyers to get bonds.
“Of course investors who already have properties on the market to rent are in a good position to earn higher yields.”
He says that some buyers may have to look to different areas than their preferred suburbs or will look for cheaper homes in the areas of their choice, and some homeowners may even look to downsizing. “Times are tough,” says Venter. “A lot of people have home loans, car payments and other debt and downsizing can give them some relief on their monthly expenses.”
Venter says this could result in a release of stock as homeowners who are on the margin of being able to afford their bonds decide to sell.
The table below demonstrates the new monthly repayments homeowners will face because of the 0.5% increase, looking at the average home loan values for small to large properties. -Myproperty.co.za
Author: myproperty.co.za
