RENTING VS BUYING: WHAT'S RIGHT FOR YOU?

Renting vs buying: What’s right for you in today’s South Africa?

---

Deciding whether to rent or buy a home is no simple choice. For many people, owning their own home is a symbol of financial success. Yet in South Africa today, this aspiration has been put to the test amid a challenging economic climate.

With interest rates reaching a 15-year high, weighing up the pros and cons of renting or buying has become a critical task for many South Africans. While property ownership has long been considered a cornerstone of adulthood, the current landscape presents unique challenges, making renting an increasingly attractive option for some. Is buying property still the holy grail, or has renting become the smarter, more flexible choice?

THE CASE FOR BUYING
Owing a home has long symbolised stability and success, and it is also seen as a savvy financial move and investment. Owing a property builds equity, offers tax benefits and means you’re putting money into an asset, not just a monthly rental expense.

Each mortgage payment brings you closer to owning your home outright, rather than just covering a landlord’s costs (or mortgage). Furthermore, South African property owners are eligible for certain tax benefits, and property in a desirable location can appreciate significantly in value over time.

Then there’s the emotional and lifestyle component: the satisfaction of truly owning your space. When it’s yours, you can remodel the kitchen, plant a garden or knock down a wall without needing permission or worrying about impacting your landlord’s investment. Owning also brings a level of security and permanence, something especially appealing for families looking to settle into a community and establish a lasting home filled with memories.

But buying has its financial realities. The prime lending rate in South Africa sits at a daunting 11.25% (as of January), putting considerable pressure on those who are hoping to enter the property market.

A house valued at R3 million (with a 10% deposit of R300 000) might demand a monthly bond repayment close to R30 000, excluding additional costs like insurance, maintenance and municipal rates.

Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty, points out that “this rate environment makes buying a challenging proposition. It’s critical for buyers to have both a solid income and a reserve fund for unexpected repairs or rising costs.”

“The notion that you must buy property to be financially secure is evolving. Today's market supports a more fluid lifestyle.”

It’s not just the mortgage either. There are numerous costs that buyers need to factor in, including transfer fees, bond registration fees and legal fees, which could add up to 8-10% of the property’s value. Buyers also shoulder the burden of ongoing maintenance and repairs – something that becomes all too real when a geyser breaks or the roof starts leaking.

THE NOTION THAT YOU MUST BUY PROPERTY TO BE FINANCIALLY SECURE IS EVOLVING. TODAY'S MARKET SUPPORTS A MORE FLUID LIFESTYLE

THE CASE FOR RENTING
For many – particularly Millennials and Gen Zs – the idea of owning a home is less of a necessity and more of a distant possibility.

Renting offers a different lifestyle, one that prioritises flexibility and adaptability. It’s a commitment without permanence, providing freedom to move with minimal hassle if your circumstances change.

Renting also allows you to explore various neighbourhoods of a city or town, and enjoy the perks of living in a space (and area) you might not be able to afford to purchase. In addition, maintenance responsibilities typically fall to the landlord, so tenants aren’t responsible for major repairs.

From a financial perspective, renting can often make sense, especially when considering the high costs of buying property. For instance, renting a home valued at R3 million might cost around R20 000 per month, considerably less than a bond repayment.

Richard Gray, CEO of Harcourts South Africa, says “Renting provides unparalleled flexibility compared to owning a home. For Millennials who value mobility and the ability to pursue job opportunities in different cities, renting is the perfect fit.”

Then there’s the question of investment. The money saved by renting – rather than paying hefty bond repayments and maintenance – can be invested in other assets, potentially generating returns that rival property appreciation.

Financial advisers often suggest looking at the stock market or other such investments that don’t require the same upkeep and can be more liquid, providing flexibility when needed. Renting instead of buying can thus be a strategy to grow your wealth outside of property ownership, especially in an unpredictable real estate market.

A THIRD OPTION
If you’re torn between renting and buying, rent-to-own agreements might offer a middle ground.

Rent-to-own arrangements allow you to rent a property with the option to purchase it after a set period, typically with a portion of each rental payment going towards the eventual purchase price. This hybrid model lets tenants begin building equity while maintaining some flexibility, and it’s particularly useful for those who are serious about home ownership but aren’t ready to buy outright.

However, rent-to-own agreements in South Africa are not without risks. They can come with complex terms, and not all agreements guarantee that your rent payments will fully cover the cost of the home.

While these agreements can bridge the gap, they’re relatively rare in South Africa’s property market, so you may need to shop around to find a suitable rent-to-own property.

TALKING NUMBERS
Let’s take a closer look at the financial differences with an example for a R3 million property. Assume you’ve saved a 10% deposit (R300 000), and with current interest rates, your monthly mortgage payment is around R30 000. Adding maintenance, insurance and rates could bring that to approximately R35 000 per month.

Renting the same property might cost around R20 000 per month. Over a year, that’s a R180 000 difference in out-of-pocket expenses. This money could then be invested, used for personal development, or even saved towards a future down payment, giving you financial flexibility.

WHAT’S BEST FOR YOU?
The decision to rent or buy isn’t black-and-white, it’s nuanced, and the best choice for you will depend largely on your life stage, career goals, financial stability and personal preferences.

Buying might make sense if you’re ready to put down roots, want to start building equity, and are financially prepared to handle the associated costs. Home ownership can be a path to stability and long-term financial growth, even in a fluctuating market.

On the other hand, if you’re in a transitional phase, are prioritising flexibility and prefer lower monthly costs, renting might be the better fit for you right now.

“The notion that you must buy property to be financially secure is evolving,” says Cobus. “Today’s market supports a more fluid lifestyle, where renting can be just as valid a choice as buying.”

Ultimately, the decision comes down to what best aligns with your values, financial goals and current lifestyle. Whether you find yourself drawn to the idea of a forever home or the allure of a city apartment that you’re free to leave, the South African property market offers options for all.

by Leah Dennis
Photos: Gallo/Getty Images