In the current market should one buy a residential property or rent?

Laurie Wener, MD of Pam Golding Properties (PGP) in the Western Cape’s Cape Town metropolitan areas points out: “It’s essentially a question of one’s own financial situation and requirements rather than a case of one versus the other. If you can afford it then it is preferable to purchase your own home as this has always proven to be a sound medium to long term investment, and remains so. This is despite the fact that there may be some dips in the capital growth of the property along the way, depending on economic trends. At present interest rates are relatively low and there are some good buys to be had. As one cannot be entirely sure when the market reaches the lowest point, if you are in the market to buy and have the finance available then now is a very good time,” she says.
Ronald Ennik, PGP’s MD for the Gauteng region concurs: “Even if the market has not quite reached its lowest point this is still an excellent time to buy because you will be benefiting from reduced prices which have been discounted by approximately 20 percent. Buyers realise that with the lower interest rates they can afford to take up such opportunities and as a result we are seeing increased attendance at showdays. It is a fact that if you wait to try to catch the very bottom of the market you will most likely miss out – so right now for serious buyers it’s more a question of deciding whether the property is suitable for your own personal accommodation needs and on your affordability and ready finance. Research properties and prices in the area that is of interest – ask plenty of questions and find out by how much asking prices have reduced.”
Ennik says if you want to buy a home but think you should rent first and then buy, unfortunately the chances are that you may miss the best buying opportunity by being committed to a six month or one year rental. “When prices are down as is currently the case, it’s relevant to compare what you would be paying in rental with the monthly repayments of a home loan. With reduced prices and lower interest rates, coupled with the fact that you would own the property, it’s undoubtedly better to buy as the repayments of the home loan should compare favourably with the monthly rental of such a property. An additional factor is that you would immediately be able to start enjoying all the lifestyle and other benefits of owning your own home – even if it really only starts to appreciate in value in six months to a year from an investment perspective,” says Ennik.
From a tenant’s perspective there are various reasons why one may choose to rent as opposed to buy, and not related to affordability, says Dexter Leite, rental manager for PGP in the Cape Town metropolitan areas. “Many people want the flexibility that renting offers, ie only being ‘locked into’ a property for a relatively short period of time. In addition, it’s easier to extricate oneself from a lease and relocate – than having to sell before one can relocate. This makes the rental option ideal for contract workers hailing nationally or internationally.
In conclusion Annien Borg, MD of PGP’s Boland and Overberg regions comments: “Whether you rent or buy is definitely related to your current financial situation and how long you intend staying in the specific town or city. At present obtaining finance is a problem and one which has affected the entry of first time buyers in the market – for whom rental would now be the best option. However if you have cash you could pick up a property in a good area for a very reasonable price. At any time in the market, good or bad, you have to take a longer term view – at least five years or more if you wish to achieve good returns.  It’s true that there are advantages to renting, but if you’ve done your homework and considered key aspects when buying a property such as location, condition of the property and possible costs of upkeep and only purchase what you can afford even allowing for deteriorating market conditions, it is more than likely that you will see a return on the investment you’ve made.”
For further information contact Pam Golding Properties on 021 7101700, email headoffice@pamgolding.co.za or visit www.pamgolding.co.za.