Some people say that renting is out of the question – after all, you are only paying off someone else’s bond. Others say renting is much less hassle than buying because you are not responsible for the property.
So where to from here?
It is probably the most important financial choice that South Africans will make in their lifetime and many find themselves stuck at this crossroad. The choice that you make will eventually depend on your current financial situation, your circumstances, and individual preference.
However, before you make the final choice, you need all the facts about both outcomes:
Purchasing a home is a long-term investment and many see it as steadfast harbor during tough economic storms.
A well-placed home can prove to be remarkably ‘tough’ during an economic recession which is why the idea appeals to so many people.
Purchasing a home allows buyers to immediately enjoy the benefits on offer and to develop the home as much as they like. They can invest all their time, resources, and funds into it and know that they are busy investing in the development of their very own property.
Many people like to use their first home as a sort of stepping stone to enter the property market. They will then progressively ‘buy up’ as their financial situation improves and their life priorities change as they get older.
One of the benefits of owning a home is that it can be used as leverage at a later stage in order to raise funds for a bigger, more expensive home.
This emphasizes how important it is to buy the right home from the start and to know what your plan is for the future. It has a huge impact on your long-term financial goals.
The importance of location
First-time home buyers are encouraged to buy in a well-maintained suburb where homes have historically held their value well rather than to buy a huge house in a suburb where home values are less stable.
There are many properties that are available throughout the country and large numbers of apartments and sectional titles are becoming ever more present.
There has also been a new trend on the rise: many of today’s estates and upmarket mixed-use developments now include a sectional title component which makes them more accessible for the first-time buyer or the young professional.
The buy-to-rent investment
People often decide to keep their first home as a rental option when they decide to move to a bigger property.
This does not only provide them with capital growth over time but it also delivers good returns which could help them settle their bond quicker. Many property investors choose to buy property solely for this reason as a second stream of income.
The renting option
The rental option remains a great alternative to those who are struggling to put a deposit down on a house and keep up with monthly mortgage payments.
In the short-term, renting is cheaper than buying because the renter is free of deposits, transfer fees, and bond repayments. The owner is responsible for the rates and taxes as well as the maintenance of the property.
Many appreciate the flexibility of renting: it is easier to give up the lease than to sell a house when relocating.
It is also a great option for expats or people who have relocated to a new city. They prefer renting whilst getting to know the area and establishing themselves before buying.
The decision to purchase or rent a property is determined by the individual. Whichever option you go with, it is important to do enough research and to work with a trusted real estate agent.