New data released by FNB shows that a large number of its clients are opting to rent their homes instead of buying them – despite the cost of rental being not much lower than the average bond.
According to the report published by the bank on Monday (9 April), 69% of its Gold account holders are renting instead of buying property, while 44% of Premier customers demonstrate a similar trend.
FNB Gold account holders are customers who earn between R7,000 and R25,000, while Premier customers fall in the R25,000 to R62,500 income bracket.
“A noteworthy inference from this finding is that while some consumers can possibly afford to buy property, they settle for renting,” said Kathu Ramoliko, head of FNB Gold’s Sub-Segment.
“Reasons such as impaired credit records could be behind this trend; however, there needs to be a change in mindset because there are long-term financial benefits to owning a property.”
Lynette Kloppers, CEO of FNB Premier added that despite the vast income disparities between the Gold and Premier segments, there is a clear common denominator: the reluctance to step into the property market – which may be due to real or perceived barriers.
“We believe there is room for people to buy into property either for ownership or as an investment especially for consumers in the higher earning spectrum in the Premier segment,” she said.
“Buying property is perceived as expensive but it’s possible to start small and build up from there.
“Another way of getting into the property market is through buying jointly with someone else to share the cost as it does not always have to be an individual effort. Buying a property is a huge commitment and buying it with someone else should not be taken lightly,” she said.
Kloppers added that if the only available option is renting, it’s better to downscale on the type of rental property and save money that can be allocated towards a deposit or transfer costs when eventually buying property.