Grant Smee, the managing director of Only Realty Property Group says that turbulent economic times have scared off some would-be homebuyers and made them consider renting instead.<\/p>\n
According to the managing director, multiple interest rate hikes over the last months have had a dampening effect on the local residential property market – with sales volumes in 2022 doesn’t 14.2% from 2021 levels.<\/p>\n
Despite sales volumes still reportedly higher than those pre-pandemic – a large percentage of South Africans plan to continue renting for the foreseeable future, said Smee.<\/p>\n
Increasing monthly bond payments are not the sole reason people are considering renting.<\/p>\n
\u201cSome people simply don\u2019t want the responsibilities associated with owning a home and prefer the flexibility of renting as it\u2019s easier to move if your job or lifestyle changes.\u201d<\/p>\n
To see if buying a home is the right adjustment, Smee provided the following factors to consider.<\/p>\n
“When weighing up whether now is the right time to make the move from renting to buying,” Smee said.<\/p>\n
He said that you should consider if a house makes sense in your life plan – by asking these specific questions:<\/p>\n
If the answer to the above questions is a strong ‘yes’, – then it might be time to transition from renting to purchasing a house, Smee said.<\/p>\n
Not just a numbers game<\/strong><\/p>\n During the pandemic, it was not uncommon for people to utter the phrase ‘it is cheaper to buy than to rent’.<\/p>\n According to Smee, now that interest rates have returned to pre-pandemic levels (10.75%) – it is no longer the case, especially in major metros.<\/p>\n Regions such as the Western Cape have extremely high rental demand and a supply shortage.<\/p>\n This has driven up the price of rent significantly, even for homes in poor condition or with minimal square footage – making the prospect of going from tenant to homeowner very attractive for those with the means to do so, as properties in these cities don\u2019t come cheap.\u201d<\/p>\n Smee calculated that the theory that buying is better than renting is now untrue.<\/p>\n By using the BetterBonds Bond repayment calculator and a national average purchase price of R1,422,922, he found that monthly repayments on a loan of that size is R14,447 (calculated at an interest rate of prime and a 20-year term).<\/p>\n “This figure is not astronomical but is still higher than that of PayProp\u2019s national average rent \u2013 now at R8,023 \u2013 effectively disproving the \u2018cheaper to buy\u2019 theory,” said Smee.<\/p>\n As a result, the managing director said he would discourage anyone from buying a home with the goal of saving a few thousand in rent every month.<\/p>\n \u201cKeep in mind that while it may currently be cheaper to rent than to buy in some parts of South Africa, by choosing to rent, you are paying off someone else\u2019s bond and in the end, you will have nothing to show for it \u2013 as opposed to a value-appreciating property,\u201d he added.<\/p>\n
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