Rental property viewings with 20 or more people present‚ and with many more applying‚ are commonplace in and around the Cape Town CBD — but what is causing these mostly “established young professionals” in search of the “live‚ work‚ play” lifestyle to have to fight over accommodation?
Many have pointed the finger at Airbnb‚ which has 18‚000 active listings in the city. But property experts do not believe the online lodging service is the main driver for the high prices and low supply of affordable rental spaces.
Property economist Erwin Rode said even though Airbnb is growing‚ it competes with hotels and guesthouses more than home owners looking to rent out their properties.
“I don’t expect [there is] any effect that Airbnb could have had on [rental property] prices in general‚” Rode said. “Airbnb is a different market. It’s a business and tourism market. It’s completely different business to the man on the street looking to rent a house or home [long term].”
Rode said the main drivers behind the pricing and shortage of rentals were regional migration and traffic congestion. People migrating from elsewhere in the country to live and work in Cape Town contributed to the high demand for rental properties‚ and people were prepared to pay more to live closer to work and avoid commutes.
Cape Town is the most congested city in the country, as well as the fastest growing. In 2015, the population grew by nearly 10% to 3.7-million and this is expected to increase to 3.9-million by 2020.
A rentals manager at property company Pam Golding‚ Dexter Leite‚ agreed with Rode and said that they were finding an average increase in rentals of about 8% year on year‚ which was “not unusual”. “From our perspective, we do not see any one thing as really having driven prices radically‚” he said. “The market has not settled itself and in our experience there has not been a huge push on rentals. If anything‚ at the moment, the market is slightly flat‚ [as it generally is] during winter months.”
Airbnb regional manager Velma Corcoran said the typical host in Cape Town earned R36‚700 a year by sharing space in their home for 23 nights.
This article was first published by Business Day on 10 May 2017.