Buying versus renting in South Africa

Harcourts CEO Richard Gray said an increasing number of millennials are choosing to rent rather than buy their first home due to the lower initial financial burden and the flexibility renting offers.

Renting is becoming the preferred option for many young adults due to the benefits that come with this lifestyle choice.

While buying a home is traditionally seen as a milestone, renting offers a flexible and often more feasible option for millennials. 

“It allows them to prioritise other life goals without the immediate pressure of homeownership,” he said.

The South African Reserve Bank (SARB) started its current hiking cycle in November 2021 to get South Africa’s inflation within its target band of 3% to 6%.

This has pushed the prime lending rate to a 15-year high of 11.75% and the repo rate to 8.25%.

South Africa’s rising interest rates have put many homeowners under pressure as they have to deal with higher bond payments and lower disposable income.

Many commentators are punting the benefits of renting, including avoiding costs like maintenance, levies, and rates and taxes.

A Daily Investor analysis has shown that over 20 years, buying a house produces a better return on investment than renting and investing the difference in the JSE Top 40.

However, there are numerous considerations when deciding whether to buy or rent.

These include the area that will determine the difference in rent versus bond repayments, how long you will stay in a house, and personal circumstances.

Whether renting or buying is the best will depend on all these factors and should be done for each person individually.

Gray outlined the benefits of renting versus buying for young adults in South Africa.

Flexibility and mobility

“Renting provides unparalleled flexibility compared to owning a home,” Gray said. 

“For millennials who value mobility and the ability to pursue job opportunities in different cities, renting is the perfect fit.” 

This flexibility allows young professionals to adapt quickly to changes in their personal and professional lives without the burden of selling a property.

Lower financial burden

“The initial and ongoing financial commitments of renting are generally lower than those associated with buying a home,” Gray said. 

By renting, tenants avoid hefty down payments, property taxes, maintenance costs, and repair expenses, which can be particularly appealing to those still building their careers and savings.

No maintenance hassles 

Gray explained that renting often comes with fewer responsibilities. Maintenance, repairs, and upgrades are typically handled by the landlord, freeing up time and resources for tenants.

“This convenience is a significant draw for millennials who prefer spending their weekends and evenings enjoying leisure activities rather than home upkeep,” he said.

Access to amenities

Many rental properties offer amenities that might be cost-prohibitive for a first-time home buyer. 

For example, many modern rental complexes include gyms, pools, and community spaces that are all maintained by the property management.

“These amenities enhance the living experience without the added personal cost of upkeep and repairs,” he said.

Economic uncertainty

With economic fluctuations and uncertain job markets, many millennials are cautious about making long-term financial commitments. 

“Renting offers a sense of financial security and stability without the long-term commitment of a bond,” Gray explained, adding that this is particularly attractive in unpredictable economic times.

Opportunity to save

“Renting can also provide millennials the opportunity to save for the future while enjoying a lifestyle that doesn’t require compromise on location or quality of living,” Gray said. 

“Without the substantial financial commitment of buying a house, tenants often have more disposable income to save or invest.”


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