Drop in Residential Rentals Predicted Post 2010

Property rental prices in South Africa could most likely take a sharp plunge around the latter part of July this year after the soccer world cup is over. Residential  letting is at the opposite end of that scale right now, and VERY high rentals are being achieved at present. This is perhaps due to a short period of a severe shortage of stock , as landlords are holding back with signing any leases, due to the possible financial rewards being promised in the market place by agents who perhaps do not know their own future.

Landlords must be extremely cautious of being lured into the false promises of high rental prices during the World Cup, and further promises of great sales prices being achieved after the World Cup... "due to an influx of foreign buyers wanting to purchase a piece of Africa". It is no secret that Real Estate agencies are battling with sales and of course creating a miniture "oversupply" will boost sales, due to desperate. Landlords that were duped into these stories now having to sell urgently later.

Raal Nordin, ceo of ONLY RENTALS, the leader of letting in South Africa, is offering simple and honest advise,

"Rather secure a good tenant now at rental prices that won't be seen for another year, than have to drop your rental with around 20% after the world cup" Raal futher cautions "as much as the fact exists that prices will drop after the world cup, so will the amount of good tenants diminish at this time, as the A-GRADE tenants will secure the right priced stock that becomes available early in July, from clever Landlords that realise the promise of the world cup fortunes are not coming their way".

In summary, rather let your property now and save yourself some expensive headaches. Landlords that are already cash strapped should not participate in this high risk property roulette.

What is greater concern is that investors who wish to purchase property after the world cup for investment purposes will think twice about buying right now, as rental returns will be un-attractive. Is this going to cause a further downturn in property prices that will already  be under pressure due to the fabricated oversupply created by Real Estate agents.

Let us hope that some of the bigger players will shortly move the direction away from this scary strategy and focus more around current supply and demand, provide property owners with sound advise as promised by them through the code of conduct embedded in the EAAB.