Renting vs buying property – it’s an interesting calculation right now
South Africa’s residential property market is surprisingly healthy.
The widely expected carnage did not materialise, and demand for homes remains robust, especially from first-time homebuyers eager to take advantage of record-low interest rates.
A R1 million home loan costs about R7800 per month right now.
In some areas, it has become cheaper to buy property than to rent it.
In others, severe pressure on rentals remain.
Buying versus renting; it’s an intriguing calculation right now.
Kieno Kammies interviewed Grant Smee, a property entrepreneur, and MD of Only Realty SA.
Smee gave a detailed account of when it’s better to buy, and when it’s better to rent.
In a nutshell; if you’re buying below R1.5 million – and you’re not spending more than 30% of your income on accommodation (and you’re not moving any time soon) – then, go for it!
Just remember, warns Smee, residential property is a long-term investment.
Property values can and do move up and down.
We’ve been surprised at the resilience of the market and the buying demand, underpinned by low interest rates… Mostly it’s sub-R1.5 million [good demand for property] … it all happens below that mark.Grant Smee, property entrepreneur
There is massive pressure on rentals [in some areas] … between a 15% and 30% drop…Grant Smee, property entrepreneur
Not as many properties as I thought would come to the market in Cape Town’s CBD have…Grant Smee, property entrepreneur
Try not to spend more than 30% of your income on accommodation…Grant Smee, property entrepreneur
Renting provides flexibility… buying; it’s not easy to move…Grant Smee, property entrepreneur
Banks are hungry for first-time buyers… interest rates are low…. It’s far more affordable… There are no transfer duties below R1 million.Grant Smee, property entrepreneur
Property isn’t a get-rich-quick scheme… It’s as easy to lose money as it is to make money with property.Grant Smee, property entrepreneur
For more detail, listen to the interview in the audio below
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