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Cape Town’s northern suburbs are seeing a rental market boom, experts report, as Finance Minister Enoch Godongwana’s recent VAT hike- though smaller than feared – threatens to nudge up property costs.
Mariël Burger, area manager at Pam Golding Properties for Cape Town North, confirmed that Bellville, Durbanville, and Parow are experiencing a rental surge, per Cape Argus.
“Some of the reasons for this include an influx of residents from other provinces to the Western Cape and the area’s proximity to business hubs like Tyger Valley and Century City.
“Demand is outpacing supply, so the market has become more competitive, with resulting increased rentals and a shortage of rental stock.
Burger also noted that a significant number of people are moving to Bellville, Durbanville, and Parow from other regions around South Africa.
“Many of these new arrivals are renting while they look for the right property to buy, which has increased the demand for rental properties.”
According to the TPN Rental Market Strength Index, the national residential vacancy rate has plunged to 4.42%, the lowest since TPN began tracking the data in 2016. This signals a tightening market where rental accommodation is in ever-growing demand.
The Western Cape stands out, boasting an even lower vacancy rate of just 1.51%.
“The TPN index shows a score of 76.85 points for demand, which is significantly higher than the equilibrium point of 50.
“This increase suggests that demand is outpacing supply, which is crucial for landlords as it often leads to higher rental prices,” Burger said.
In Bellville, Durbanville, and Parow, renters are hunting for spacious homes that offer good value, with proximity to key amenities being a major drawcard. Families favour houses and townhouses, while professionals lean toward lock-up-and-go apartments.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa warned that if affordability tightens further, the rental frenzy could intensify, pushing prices even higher.
He acknowledged some relief that VAT did not jump by the initially proposed 2%, which could have stalled the market’s momentum after previous interest rate cuts.
However, he cautioned that even the smaller 0.5% VAT hike, paired with other tax adjustments, will bite into consumer spending.
For instance, the decision not to increase medical tax credits could further strain household budgets, making affordability an escalating concern.
“It is disappointing that personal income tax brackets were not fully adjusted for inflation. Without a proper inflation-linked tax bracket adjustment, middle- and higher-income earners will pay more in real terms due to ‘bracket creep.’
“This effectively reduces their disposable income, leaving less money for savings, home loan repayments, and property investments,” Goslett said.
Goslett added that the proposed changes will inevitably add further financial strain on consumers already grappling with high unemployment and sluggish economic growth.
“As a result, fewer buyers are likely to be able to afford property purchases, which could lead to a decline in market activity and overall transaction volumes,” he added.
Rhangani Mbhalati, executive chairperson at Chapu Chartered Accountants, highlighted that as economic conditions improve and employment opportunities grow, rental demand may rise further, driving up prices.
“The budget aims to stabilise government debt at 76.2% of GDP by 2025/26, promoting fiscal responsibility. This stability is crucial for maintaining investor confidence and supporting sustainable economic growth.
“The reduction of Eskom’s debt relief package by R20 billion reflects the utility’s improved financial health. A more stable energy supply is essential for economic activities, indirectly benefiting the property market,” Mbhalati added.
With rental demand soaring and supply tightening, Cape Town’s northern suburbs are becoming a battleground for tenants seeking well-priced, well-located homes.
While the VAT hike and broader economic shifts may challenge affordability, the strong rental market signals resilience amid uncertainty.
For landlords, it’s an opportune moment, while for tenants, the race for prime properties is only getting tougher.
[Source: Cape Argus]
