While the times are constantly changing and our personal circumstances keep evolving as a result, owning property might still be the ultimate goal for some – and a distant dream for others. Nonetheless, it’s something that we all think about at some point because owning a home is still seen as a mark of success. But as more people become economic migrants, moving around the country and globe, following personal and professional opportunities – does it still make sense?
We recently spoke to Absa property analyst, Jacques du Toit, about current trends in the South African property market, what the data is saying about capital growth and which factors to consider when deciding whether to buy or rent.
So, first things first, how does one even start making that decision? According to Du Toit, it all comes down to personal circumstances. “If you want to rent it’s all about location – you’ll either search for a property near your workplace, shopping centres, schools, etc. That’s where most people will shift their aspirations – when you ‘re unable to own property, you at least want to make sure you rent somewhere that allows you to spend less time in traffic.” He continued explaining that renting is also a good option for young people who want to be more mobile and flexible because they aren’t earning a large salary – “if your finances don’t allow you to buy from the start, which it probably won’t most of the time, it’s always a good idea to rent for a few years while you save up for a deposit and start looking to buy when you can afford to.”
According to him, the current property trends, based on the third quarter 2017 FNB estate agent survey, imply that we’re experiencing a buyers’ market – which suggests that it’s better to buy, then it is to sell or rent property. Take a look at these stats:
Du Toit explained that capital growth is expected on an annual basis as well. This means that if you buy property, its value will increase over time, so your investment will grow and you’ll be able to resell it for more than you paid. “Capital growth was, on average, around 4% in 2017, with a 5% growth expected in 2018 (based on the economic outlook as per growth of 1.4%, stable interest rates, lower inflation), improving consumer finances and confidence.”
With that said, you could always go to our website and use our affordability calculator to figure out how much your current financial situation will allow you to spend on paying rent or your own bond. And, if you need further information on our home loan options feel free to visit our website or give us a call on 0860 111 007.
Lastly remember to keep an eye out for the National Budget Speech that takes place on 21 February – according to Du Toit, this can greatly impact your decision on whether to buy or rent, especially if the transfer duty threshold is increased. “There’s still very good value, in established suburbs, falling below the current R900 000 transfer duty threshold.”
Now that you’ve decided to buy – here are Jacques’s top tips on how to shop for a home, like an economist.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.