Durban - Owning property is not as easily achieved as it was back in our grandparent’s era. The cost of entry-level homes has risen to amounts that far outreach the earning potential of graduates who have just entered the job market.
CEO and Regional Director of RE/MAX Southern Africa, Adrian Goslett, said the reality is that most South Africans will end up renting property at some point, particularly during the early stages of their lives.
According to the FNB Estate Agent Surveys through 2017, the estimated average age of a bonded home buyer was 37 years in Gauteng and 39 years in the Eastern Cape, Western Cape and KZN. The stats prove that the chances of somebody owning property before the age of 35 are about as low as the chance that they become an overnight social media sensation – which would perhaps explain how they would come to afford to purchase property so young in the first place.
The key to beating these statistics and purchasing in your late (let’s be realistic here) twenties is a word millennials love to hear: creativity. Initially, you might need to reconsider what sort of home you’re saving for.
"Being a millennial myself, and working as the PR for RE/MAX of Southern Africa, I am well aware of the benefits of owning a property of my own. However, logistically, this is simply not possible right now. For starters, I have just relocated to the Southern suburbs of Cape Town to be nearer to my office, and I am not yet sure where I want to live for the next five to ten years. Previously, I had been living with my parents 50 km away from where I work. Renting offers me the ability to save on fuel costs while I save for a deposit on a home. At the same time, it allows me the chance to explore and experience the area in order to figure out where I want to put down roots.That being said, I am also aware that property prices in the Southern suburbs mean that I will probably only afford to purchase a cupboard-sized apartment in a somewhat less idyllic neighbourhood than what I’m currently renting in. Concerned about how I could ever both live in the house I want and own property, I excitedly jotted down these words while in a meeting about the ‘renting versus buying’ argument with our CEO the other day," he said
Goslett said the truest means of investment is if you purchase a home and rent it out, allowing the expenses to pay for themselves while you watch the value of the home increase over time. Eventually, the bond will be paid off, and you will have a source of recurring monthly income that is pure profit – minus the monthly rates bill, that is.
“So, the answer to whether it is better to rent or buy is, well, both. Renting can allow you the opportunity to live in an area you’d like in a home suited to your needs at a price you can afford, and buying will allow you the stability of a growing income that will offer you financial security for your eventual retirement. You can purchase one-bedroom investment property under R1 million in a good yet slightly more affordable neighbourhood and rent it out while you live in a spacious rented home closer to your office that might have been unaffordable if you had chosen to purchase it,” Goslett said.
"Once you’re in the property market, it is much easier to move up the property ladder. After owning a home for ten or more years, the value of the property when you sell will likely afford you a better home than with what you first started – especially if you’ve purchased a property in the right neighbourhood. It is then possible for you to afford to purchase your ideal home rather than rent it forever,” he said.