Scores of cash-strapped homeowners struggling to service their home-loan repayments are renting out their properties ? and getting rentals high enough to cover their bonds.

Property analysts this week said desperate homeowners are scrambling to hold onto their homes until the property market recovers.

Some have opted to rent out their homes, charge exorbitant rentals to cover their costs and then move to cheaper accommodation.

Following the recent decision by the Reserve Bank's monetary policy committee to cut the repo rate by 50 basis points to seven percent, banking groups Standard Bank, Nedbank and Absa decreased their home loan base lending rates from 11 percent to 10.5 percent.

According to Absa, the monthly repayment on a R500 000 home loan has now dropped to R4992 a month from R5161, and the instalment on a R1-million loan has eased to R9984 from R10 322.

For a R2-million loan, the monthly repayment is now R19 968 from R20 644, and a R3-million loan dropped from R30 966 to R29 951.

Why demand is booming

Estate agents this week said the demand for rentals is booming because banks have tightened their lending criteria significantly, expatriates are returning home and there is increasing recruitment of international contract workers.

Pam Golding Properties last month concluded a 'short-term lease' for a four-bedroom home in Bishopscourt at R115 000 a month with a foreign couple.

Some of the asking prices ? excessive for many South Africans ? are a bargain for foreigners for whom the sums translate to between US$769 (R6000) and US$10 256 (R80 000).

PGP's rentals director Dexter Leite said renting a home is proving to be a very practical option for many South Africans in the current property market.

No other option but to rent

"The difficulty of obtaining bond finance continues to be a major stumbling block. Many would-be buyers have no option but to rent for the time being," she said.

"The rental market is also particularly ideal for contract workers who may only be in a particular area for a fixed period of time, and will then want to move on with the minimum of fuss," said Leite.

Sought-after suburbs in Johannesburg include Sandown, Westcliff, Hyde Park, Sandhurst, Bryanston, Fourways, Dainfern and Morningside, where executive rentals can fetch between R35 000 and R80 000.

Ten years ago, an upmarket two-bedroom apartment in Sandton's Morningside, north of Johannesburg, was on the market for R5500 a month. Last year, an identical apartment in the same block was on offer for R25 000 and today it's up for grabs at R26 500 a month.

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