PropTech company shakes up rental sector

Forbes Africa announced in July that HouseME, one of SA’s property technology companies had been identified as one of the continent’s eight top African startups, contributing in a vital way to Africa’s growth. This announcement was done in collaboration with Accenture, which ran an adjudicated competition over several months in building up to this announcement.

HouseME has become increasingly visible over the past six months as it began managing the V&A Waterfront’s residential portfolio, launched DepositFREETM renting for tenants and offered eviction coverage as part of its suite of services.  

We caught up with Ben Shaw, CEO of HouseME, to ask a few questions about the state of the market, and how the company has grown over the course of the year. 

PropTech space 2019

HouseME has enjoyed a very exciting year, having launched our eviction coverage and DepositFREETM products to landlords and tenants respectively. Not only have these products help vacancy reduction, but have propelled us forward ahead of competitors in how we serve our clients,” says Shaw 

Shaw explains that the prop-tech industry is growing in strides and is aiding towards the development of HouseME. 

Since launching, we’ve had 40% of our DepositFREETM product from qualifying tenants which underlines the needs we’re able to meet in building the HouseME platform out carefully. Other notable events have been the funding of other proptech players – which although increasing our competition – is really exciting for us as it indicates that we’re playing in the right space. 

Current rental landscape

Shaw comments on the impact of the increase of living expenses and our precarious economy on the property sector. “The South African residential market can be characterised in 2019 by declining disposable income and low business confidence on the demand side. Some studies indicate that over 70% of consumers are not living within their means, and almost 50% of all consumers are struggling to adapt to changing financial implications of the economic slowdown,” he explains 

He adds that there has been a visible trend in the decrease of rental prices across the country.  

Happily, this is cyclical and we do expect a rebound as we enter the summer season. Demand continues to show volatility on a monthly basis, but is unlikely to pull pricing up in the short-term. This can be further seen by real rental price decreases across the country, where Q1 2019’s CPI (a measure of inflation) is reported at 4.5%, but residential rental grew only 3.7% on average.”  

Shaw says that residential sales and rental are under pressure and prices remain constrained due to the current market.  

Improvements in the rental market

Drivers of property performance are very simple: demand and supply. Demand is a factor of population growth, economic activity and business confidence, and general levels of disposable income. Supply is easily tracked by industry bodies and statistics aggregators and is driven by new-build developments, repurposing of built assets, and Airbnb boomerangs,” explains Shaw. 

Shaw says that the figures of vacancy this year have increased rapidly, compared to 2018 but he is hopeful that this will turn around next year.  

Although holiday letting will absorb some level of supply at the turn of the year, this will create an artificial pricing floor before long-termlets come under pressure again in the second quarter of 2020. South Africa’s vacancy residential rate was reported to be 8.6% in Q1 this year, higher than all quarters in 2018. We believe a recovery will come towards the end of 2020, soonest. 

New partnerships on the cards

HouseME recently launched a professional photography network and Assist package to help landlords manage their properties from remote locations, and also work directly with agencies looking to modularise their value chain.  

This makes them more efficient and also extends the services that they can offer. Users can look forward to further integrations and better user experience through these partnerships. It is testament to the company’s performance that we are now servicing one hundred lease starts each month!” exclaimed Shaw. 

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