"Many South Africans aspire to own homes, feeling a sense of pride in their property and preferring to pay off their own bond rather than paying rent," says Jonathan Davies, Pam Golding Properties Hyde Park area manager.
"Others favour renting a property because they may not be able to afford a deposit on a home in their current financial situation, or they find renting more convenient to their particular lifestyle. The choice of whether to rent or buy really is a matter of individual preference and circumstance.
"The residential property market is of course subject to the economic vagaries of the future. Purchasing a well situated home is therefore critical and this remains a sound long-term investment. Indeed, the well-placed home can prove to be remarkably 'recession proof' in tough economic times," Davies explains.
"For large numbers of South African families and individuals, the allure of owning a property of their own is irresistible. Purchasing a home allows buyers to immediately enjoy the lifestyle benefits on offer and to develop the property according to their own particular tastes. They can invest time and resources into the home secure in the knowledge that are investing in developing their own particular property.
"Many use their first home as a stepping stone into the property market and then progressively 'buy up' to larger properties as their financial situation strengthens and their life priorities change, as they start a family and so on," Davies says.
Among the many other benefits of owning a property is that once the individual owns such a substantial asset it can be leveraged at a later stage in order to raise funds for a larger or more expensive home. This underscores the importance of purchasing the correct home.
"We would advise the first time buyer to rather seek a modest property in a suburb where homes have historically held their value well, as opposed to buying a larger home in an area where home values may be less stable," he continues.
People often decide to keep their original property as an investment when they move on to a bigger, family home. This can provide them not only with capital growth over time, but also good rental returns, which may assist them to settle their bond. Some investors go on to purchase a number of properties from which they derive a regular income.
"As noted above, the rental option remains an alternative to those who are not able to afford to purchase a home. It should be noted that, in the short term at least, renting a home is cheaper than buying, as the renter does not have to invest in deposits, transfer duties, bond repayments and other costs. The owner is also usually responsible for rates and taxes, insuring the property, as well as maintenance and repairs," Davies says.
"Others appreciate the greater flexibility that renting may infer; it being easier to give notice on a lease rather than sell a home in order to relocate. This makes the rental option more appealing to contract workers who find they often need to relocate or those who wish to defer making a major financial commitment at their particular stage in life.
"Renting may also be the preferred option for people who have relocated to a new city or to expats who are returning to the country after some years as it allows them re-establish themselves before making major financial commitments," concludes Davies.
