Rent prices stagger
As pandemic takes its toll
31 July 2020 | Infrastructure
“The mounting economic consequences of the pandemic appear to force many households to seek more affordable housing options, while property owners are beginning to respond to these new realities by offering low prices in order to fill vacancies. In earnest, prices are responding much more rapidly in the parts of the country most heavily impacted by Covid-19,” Uusiku said.
The halt in normal rental activity by about 49% witnessed over the second quarter, was foreseeable as Covid-19 related job losses had a direct material impact on the rental market. “While we do not see any significant rent reductions at the national level yet, rents have declined rapidly in the most heavily impacted towns such as Walvis Bay and the northern towns” he said.
Uusiku says looking ahead, “the impact of Covid-19 on rent prices should further be seen through two lenses. Firstly, how soon a cure is found and secondly, how quickly the economy is able to recover. In the event of a more drawn-out economic recovery, which is very likely, we may see a slowdown in new household formation and a shift towards a multifamily renting culture to save on housing costs.
“These dynamics could also mean that competition will remain tight for rental units at the middle and lower ends of the market, while luxury vacancies may become harder to fill. Furthermore, as the culture of remote work gains traction, we could also start to see a switch in residential preference - away from inner-city locations towards more affordable suburbs.”