Reasons to prefer buying over renting
RE/MAX Southern Africa shares advice on deciding whether to rent or buy.
Owning a home can seem daunting, especially given the current interest rates and inflation. Those feeling the pinch are encouraged to remember the many reasons to prefer owning to renting.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa says those who have entered homeownership for the first time in the last three years had a rough introduction to what it is like to own a home.
“Interest rates change over time, but very seldomly as dramatically as they have since the pandemic in 2020, ranging from the record lows of around 7% (prime) to where they are today at around 11.75% (prime).
Typically, interest rates stay relatively stable and only move by about 0.25% up or down a few times a year. Interest rates lingered around 10% (prime) from 2016 – 2019,” he notes.
When interest rates are more stable, Goslett explains, it also becomes easier to keep up with the repayments on a home loan because the repayment amount does not fluctuate too greatly each month.
“While interest rates have been on a sharp incline for some time now, we are hopeful that we will soon be entering a period where interest rates will remain more stable, which should make it easier for homeowners to adjust to the higher bond repayment amounts,” he says.
With this in mind, homeowners are also encouraged to focus on the many benefits that homeownership offers.
“When you buy a home, each monthly repayment acts as an investment towards an appreciating asset. Paying rent, on the other hand, can only be viewed as a monthly expense and will not be adding to your future wealth,” says Goslett.
Apart from the financial aspects of homeownership, Goslett adds owning a home also provides you with the freedom and autonomy to make the space entirely your own.
Homeowners do not have to adhere to the rules and regulations imposed by landlords and are free to make alterations they wish.
“As a bonus, alterations can also be viewed as investments if they have the potential to increase the resale value of the home. As a homeowner, your home improvement projects can be viewed as an investment rather than an expense,” he notes.
Owning a home also often comes with a sense of accomplishment and can be seen as a milestone and a source of pride for many individuals and families.
“Homeownership can provide a valuable asset to pass on to future generations. Beyond this, once the bond is paid, it can provide an affordable living arrangement for your retirement years.
“If you have extra space in your home, you could rent it out to generate additional income to supplement your income,” says Goslett.
Overall, owning real estate is a great long-term investment strategy. “Although it might be tough to keep up with the bond repayments over this time, interest rates will stabilise again and the sacrifices you make today to help you continue to afford the home will pay off greatly in the future,” he concludes.
