“The prospect of rising local interest rates from 2022/23 also does not bode well for house prices over the medium term,” says Lamprecht.
According to Rode’s residential survey data, flat vacancy rates dropped to 11,4% in the second quarter of 2021 – down from 12,1% in the first quarter of 2021.
However, Lamprecht says vacancy rates are well above the 5% average recorded in the three years - from 2017 to 2019 - that preceded the pandemic.
“This implies that they are high compared to historical levels. High vacancy rates have put enormous pressure on rentals, which will almost certainly continue in the short term as tenants remain under significant financial pressure,” he says.
John Loos, Property Sector Strategist at FNB Commercial, says that none of the three major commercial property classes have yet seen their activity ratings return to pre-lockdown levels recorded in the first quarter of 2020 although, industrial property’s most recent rating is coming close.
“This relative situation remains in line with an economy whose level of output, as measured by Real GDP, is also not back up to pre-lockdown levels,” says Loos.
Lamprecht says the Rode’s Report for the second quarter of 2021 indicates that the property sector is busy recovering.
“However, we are without a doubt not yet out of the woods. This is due to the weak economy and because another Covid-19 wave hit South Africa in June. Besides, property fundamentals, such as vacancy rates and rentals, are generally still under significant pressure. This implies that it will not be plain sailing ahead.”
Courtesy of Sarah-Jane Meyer - Private Property