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Rentals may drop by 10 percent post lockdown

Published May 26, 2020


CAPE TOWN - As the percentage of property value stays relatively consistent in the medium-term, which means that as prices drop, rentals will drop too. This is according to Ben Shaw, Chief executive of residential property disruptor HouseME.

Shaw said the property value, as well as economic pressure on the consumer, rentals for tenants, will become cheaper and more appealing for the next few years.

He notes that many Airbnb hosts are already capitalising on this as their units would otherwise stand vacant.

"This increase in supply is again likely to pull prices down, with the result that HouseME predicts an average rental reduction of 10 percent over the next 12 months," he said.

The property expert said liquidity and stability of income are expected to be the two most important drivers of decisions in the coming years.

"Retention is key as finding new tenants will be challenging in the current lockdown period and for some time afterwards. Some options other than to reduce the rent is to offer a longer time to repay or a one-month payment indulgence which must be repaid by the end of the lease. It’s also worth both landlords and tenants investigating alternative rental platforms that offer lower rental fees and additional financial benefits," he said.

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