Head of CPI at Statistics South Africa, Patrick Kelly, told I-Net Bridge on Friday that their rental survey started in 2005 will be used in the new Owners' Equivalent Rent (OER) measure in the new CPI index to be released in February next year, but that the existing outsourced rental survey would remain.

He noted that the data series that has been published up until now entailed outsourcing the collection of that survey to a reputable firm of property economists since 2004.

"There are no questions about the quality of the survey — we have had good service on that," he said.

"Our survey started in 2005 will be used for OER — the other one is for actual rentals. We debated if we should have two and there are a range of arguments either way. We decided to stick to two as we do have a time series for the existing one with established trends," said Kelly.

He noted that while the outsourced survey picked up on what could be called "marginal rentals", Stats SA's own survey picked up "average rentals".

In answer to a question on a recent report noting that private sector rental portfolios had shown rental growth of 12.5 percent as opposed to the Stats SA rental survey levels of 4.4 percent in the third quarter, Kelly felt that this depended on how broad the scope of any survey is.

Broad survey

"Our survey is in 40 different towns and cities across the country and across a range of different suppliers of rental properties. I am not saying the numbers are not true based on their portfolio — I have never looked at how their portfolio compares to the national picture," he said.

Many analysts feel that CPI in South Africa may initially fall more sharply than CPIX once the new weightings take effect as bond costs of about 15 percent are well above property yields of 7-8 percent.

This should help close the gap between CPI at 13.4 percent and CPIX at 13 percent.

OER measures the cost to owners of foregoing rental income by living in their properties and effectively replaces the CPI excluding home loan costs targeted until now.

I-Net Bridge