The rental prices in South Africa have dropped dramatically in the last year due to a higher ratio of available landlords to interested tenants.
According to Business Insider, for the first time in seven years, many of Cape Town’s rental properties are getting cheaper due to the many vacant apartments in and around the city. Rental agencies noticed the occurrence late in October 2017 as the oversupplied rental market increased. About 35 new approved developments are near to completion which means the demand for tenants will upsurge while overpriced units will stay vacant for longer.
Many landlords are not aware of this trend and assume they can rent out their property at the same rate as they did last year, even with some inflationary increase. It is often only when their property falls vacant that they realise that they might need to drop their price to reflect the new market reality. Missing a month’s rental income is extremely costly and can cause delays in bond repayments. But how can independent landlords stay abreast of the market value of their property in real time?
The property technology company, HouseME, has come up with an answer to this. It has developed a proprietary software tool called PlaceME®, which allows tenants to place an offer on a property, above or below the landlord’s asking price. When a property is in high demand, tenants will tend to place higher offers to secure the property swiftly. When demand is low or overpriced for the current market conditions, tenants who really want the property can place a lower offer. This smart technology thereby allows the landlord to see in real time what the market is willing to offer for his or her property.
The final decision still sits with the landlord though: when a tenant has placed an offer below the asking price, the landlord will get a notification to approve or reject the offer. The competing offers process remains open for several days, so the landlord will only be presented with the best offer to approve. In other words, the PlaceME® Tool does not force the landlord to reduce the price, but merely gives an indication of the property’s current market rental value well before it is due to fall vacant.
Many moons ago, landlords were in a luxurious position due to the influx of tenants, but the market is now forcing landlords to be more thoughtful when they have to decide on a price. Letting Manager at Knight Frank, Gail Cawood, said an increase of rental supply has caused the prices to drop. Furthermore, she added that there is a lot of competition in the industry. Cape Town ETC reported that a furnished two-bedroom apartment in Claremont, which was rented for R15 000 p.m last year can now only achieve R12 000 p.m. The lower market is also feeling the decline with a Plumstead one-bedroom apartment struggling to achieve R6 500 p.m this year.
HouseME, the digital platform that connects prospective tenants to landlords, is the first to offer the full automation of letting agency process with fair and transparent rental pricing for a fraction of traditional fees. Not only will HouseME find the best rental price for your property, we will market your property in three different marketplaces, coordinate the viewings with you, vet all interested tenants, hold the deposit once it has been paid and collect the monthly rental on your behalf. Charging only 2.5% of rental on its flagship package, HouseME has proven to be by far the most affordable to landlords when compared to other South African rental agencies.
Founded in 2016 by two Capetonians, HouseME has redefined residential rentals for more than 10 000 of its users and continues to grow by a thousand users per month. If you are ready to explore the new way to rent, check out HouseME’s pricing guide and make the affordable change.