Are you better off buying or renting property?
Expert evaluators reveal why buying property in South Africa is much riskier than renting an equivalent place. Here’s the truth …
Congratulations if you rent a house/apartment right now, because buying property in South Africa is a much riskier endeavor, say top property evaluators. Plenty of sayings come to mind in this scenario. Like, “Why buy the cow when you get the milk for free?” That’s kind of the same deal for those renting versus buying property in South Africa.
Because, according to Rode & Associates – the top property evaluators in Mzansi – their latest report on buying property in South Africa is pretty damning. As reported by Daily Investor, Rode says South Africans are far better off renting versus buying due to the country’s high interest rate environment and general economic volatility.
BUYING PROPERTY IN SOUTH AFRICA
Therefore, in the current economy, you’re better off renting and saving what you can by not splashing on high bond instalments. Moreover, the latest data supports the growing trend of increased popularity for rentals. In the first quarter of 2024, flat rentals increased by 3.6%. Likewise, the fourth quarter of 2023 also saw rentals grow by 4.6%. Better still, rentals had been on a steady decline since 2015, so those numbers represent a marked shift.
Another reason why renting versus buying property in South Africa is a safe bet is, “Property owners/managers are keeping rental increases below inflation to prevent losing tenants,” said the Rode report. Plus, the rental market looks like a short-term win while is South Africa’s interest rates remain elevated.
FIFTEEN-YEAR HIGH
Since November 2021 and the COVID-19 pandemic, the South African Reserve Bank started its current hiking cycle. Furthermore, this has seen prime lending rates hit a 15-year high (11.75% and a repo rate of 8.25%). It’s no wonder buying property in South Africa has many well-meaning homeowners cracking under the pressure.
So, don’t feel that societal pressure to put you and your spouse into a mountain of debt to buy a house, simply because ‘it’s what you should do.’ Renting is cheaper, so save up and hopefully you can afford a bigger deposit on a home when they’re more affordable and interest rates are more competitive. Moreover, with just three weeks to go to the 29 May General Elections, who wants to tie up all their money into immovable bricks and mortar in South Africa anyway …