Money growth in rentals

Mary Papayya

Mary Papayya

Savvy investors in Durban's property sector have secured rental returns significantly higher than the national average, bolstering the argument that land remains a sound investment vehicle.

The recently released Trafalgar December 2006 rental index reflects that growth in the Durban rental market is second only to East London, which had come off a low base, and matched rates achieved in Johannesburg.

But the report also said the market was being externally buoyed by high levels of immigration and a catch-up in high-density areas.

Nationally rentals have grown more than 25percent in the past three years, experiencing a substantial upswing since June 2005 as the market tracked the medium-term surge in residential house prices.

The report demonstrates how rentals have risen alongside the market boom, with property still offering investment opportunities.

Trafalgar chairman Neville Schaefer said rentals had consistently shown solid growth, with the figures confirming the long-term stability of property as an investment. He said several factors had converged to push up rentals.

These included high house prices and rising interest rates, which had pushed average bond repayments to about 9percent of household incomes, forcing people in lower-income brackets to rent rather than buy homes of their own, he said.