It’s really not an easy decision. Over the past four years many potential buyers have put their property dreams on hold, waiting for the market to shift or stabilise. The savvy investor is monitoring indicators like repo/interest rate, economic performance, property sentiment, and some are waiting for the election results to determine where they might want to live. First time home buyers are watching food inflation and other associated cost-of-living factors, watching their dwindling Rand affect their savings plans.
Paul Stevens CEO of Just Property picks up on this discourse, saying that for many South African’s the dream of owning their own homes provides a sense of pride and the ability to build equity by paying off a bond holds significant appeal. “On the other side of the coin, renting offers flexibility and convenience that better suits certain periods in our lives and certain lifestyles.”
“Ultimately, the choice boils down to your individual needs and priorities,” he says. “By carefully considering those priorities, you can choose the ownership structure that best aligns with your long-term goals and lifestyle.”
Rental
- Ultimately renting provides a secure and comfortable living situation without the immediate commitment of homeownership.
- It avoids the significant upfront costs that buyers face, such as deposits, transfer duties and bond repayments.
- Renters are relieved of the responsibility for rates, taxes, insurance, maintenance, and repairs, freeing up resources for other priorities.
- It appeals to families establishing themselves in a new city such as those with fluctuating incomes, youngsters at the start of their careers, and contract workers who move from place to place.
- Renting is affordable, that is if you stick to your maximum budget or share with housemates, allowing you to unlock significant savings.
- Renting suits the nomadic lifestyle.
“While renting may involve some discipline and effort, such smart sacrifices can pay off in the long run,” says Stevens. “If the dream is to own a home one day, I strongly recommend that tenants look to the future while renting and, for a few years, focus on building up a deposit.”
Saving for the property purchase while renting
- Discipline is key.
- Develop a strict savings plan and allocate a predetermined portion of your income specifically towards your homeownership goal.
- Treat your savings like a fixed expense, as important as rent or groceries.
- Consult a financial advisor about crafting a personalised savings and investment strategy that will consider your risk profile and accelerate your path to homeownership.
Owning a Home
- Property ownership offers the ability to leverage your equity for future endeavours.
- Owning a substantial asset can unlock financing options when you require a larger or more expensive home.
- Choose the right property from the outset.
- First-time buyers are encouraged to buy a modest property in a great suburb with a history of stable value growth rather than fall for a larger home in a less established area.
- If you buy prudently, you could retain your starter property as an investment.
- Owning a home unlocks a unique set of lifestyle benefits. You can personalise the space to your taste, invest in improvements that enhance your comfort, and enjoy the stability of having your own place.
- Provides valuable rental income that can assist with future bond repayments.
- Generate a steady income stream for your retirement.
- Property ownership is a secure asset that can be left to children.
- Property ownership can be the a stepping stone to a larger property portfolio.
“Purchasing a well-located property remains a sound long-term investment that can offer resilience even during economic downturns,” advises Stevens.
Given the varying needs of individuals, Stevens recommends extensive research so that decisions can be aligned with specific life situations, “but always keep your long-term goals in mind. Consulting a trusted property advisor with expertise in both buying and renting will help you make an informed decision that sets you on the right path towards your housing goals.”
