Demand for rentals is booming
SCORES of cash-strapped homeowners struggling to service their home loan repayments are renting out their properties - and getting rentals high enough to cover their bonds.
Property analysts this week said desperate homeowners were scrambling to hold on to their homes until the property market recovered.
Some have opted to rent out their homes, charge exorbitant rentals to cover their costs and in the meantime moved to cheaper accommodation.
After Thursday's decision by the SA Reserve Bank's monetary policy committee to cut the repo rate by 50 basis points to 7percent, banking groups Standard Bank, Nedbank and Absa announced they would be decreasing their home loan base lending rates from 11percent to 10,5percent.
According to Absa the monthly repayment on a R500000 home loan will drop to R4992 a month from R5161, while the instalment on a R1million loan will eased to R9984 from R10322.
Estate agents this week said due to banks tightening up on their lending criteria, expatriates returning home and the increasing recruitment of international contract workers, demand for rentals was booming.
Pam Golding Properties last month concluded a "short-term lease" for a four-bedroom home in Bishopscourt at R115000 a month to a foreign couple.
PGP's rentals director Dexter Leite said renting a home was a practical option for many South Africans in the current property market.
"The difficulty of obtaining bond finance continues to be a major stumbling block. Many would-be buyers have no option but to rent for the time being," she said.
Sought-after suburbs in Johannesburg include Sandown, Westcliff, Hyde Park, Sandhurst, Bryanston, Fourways, Dainfern and Morningside, where executive rentals can fetch between R35000 and R80000.
While rentals in Melville, Auckland Park and Westdene average R2850, tenants in Rosebank, Killarney and Illovo are paying on average R6000.