Vacancy rate: Atlantic Seaboard in pole position
Category Cape Town Property Market
Have you noticed that your neighbourhood is quieter than usual? That's probably due to the high number of vacant homes lately. According to the TPN Credit Bureau, one in four homes on the Atlantic Seaboard lie vacant.
At a broader level, with a total population of 17.2 million households, South Africa now has over 3.7 million tenants - and 17 percent of Cape Town's housing is vacant. The Atlantic Coast is the next worst-performing area in the survey. For the past two years, one in four properties has seen a vacancy percentage of 24.4 percent. According to the bureau, this is mainly due to property affordability and limitation of international travel.
The main cause of this phenomenon comes down to a lack of household income. The decline and/or loss of income caused by the Covid-19 health crisis in 2020 contributed to the early termination of rental contracts by tenants, the drying up of demand in 2020 and the surge in vacant units in 2021. The BankservAfrica Take-home Pay Index confirms that 10.4 percent fewer workers received a paycheck in October 2020 compared to October 2019. It indicates that the lowest income earners - weekly wage earners and casual workers - were the most affected by the loss of income. As a result, fewer households were participating in the rental market.
Market demand began to deteriorate in mid-2018. Supply, meanwhile, was slowly increasing, driven by spill over from short-term rentals at the time. However, demand for housing is high in the lowest income segment of the market, and for landlords, the quality of tenant applications is low, which has an impact on the vacancy rate where 16% of low-end properties are vacant. Lately, fresh construction projects are coming online thereby increasing the supply of rental stock.
In Maslow's Hierarchy of Needs, the first category is housing and the second is safety. Renters agree that price is the number one factor and security is the second most important when choosing a home. There is no doubt that residential real estate is an asset that will always have a market however the market is constantly changing. Today's market requires a delicate balance between price, affordability, maintenance, safety and increased municipal expenses. Careful planning and consistent management of these variables will ultimately pay off.
The Quay 1 International Realty sales teams have been very active throughout the winter period, concluding over R70 Million worth of sales in the month of August alone. As we approach the "selling season" in September, we have a number of keen purchasers that are looking to purchase in the area.
Should you wish to take advantage of this window of opportunity, or if you are interested to know what your property is worth in the current market, click on the link below and one of our area specialist brokers will be in touch.
Author: Quay 1 International Realty
