In this current economic climate, it’s hard to gauge whether making a purchase on a property is better than renting. It’s all very relative as not everyone has immediate access to cash which is obviously the dream. If you have R2 million in cash and are able to afford that 2 bedroom, 1 bathroom studio apartment in a swanky suburb then many financial experts would suggest that you go for it. But if you don’t have access to the money immediately, then renting is probably your next best bet. The only problem is, in the long run who will benefit more from your living arrangements? Will it be you or your land lord?
We spoke to the principal of Bergplatz Property Investments cc (Johannesburg) and one of the shareholders, Gerhard Heiser, who gave us a breakdown of both options.
“Depending on the budget available, renting an apartment is presently cheaper than buying. As a tenant you don’t pay the levy, rates and taxes and in most cases water. You pay your rent, electricity and waste removal if charged by the body corporate. Maintenance falling under fair wear and tear is also the responsibility of the owner. It’s also easier to re-locate if you just rent.”
“Purchasing an apartment or flat means that you build up your assets, wealth and inflation hedge*. Your fixed property increases in value depending on the location, and the increase in value could be higher than the inflation. This is particularly true for those buying off plan at new developments.
Buying a house is also the same, plus if you’re buying a freehold (full ownership rights), you do not pay a levy to a body corporate. All you pay is your rates and taxes, sewage, waste removal, water and electricity.”
So after taking all of this into consideration, it seems that there isn’t really a right or wrong. As a property expert, Heiser says that, “it all depends on the budget and deposit. If as a buyer, you do not have the 10 to 20% deposit and the cost of the transfer then it is more advantageous to rent. If you have the deposit and the funds for the transfer costs it is better to buy. Fixed assets, like houses or flats, are the best inflation hedge and you gain a capital increase.” As a whole, Bergplatz Property Investments cc manage property for investors. From these they have 70% tenants and 30% sales.
So you see, it really is all up to you. Get those numbers crunching, consult with a financial expert and make a decision that makes business sense.
*An investment that is considered to provide protection despite the declining value of a currency.
The 5 most expensive suburbs in South Africa
Property analysts, Lightstone Properties compiled a list of the country’s most lavish addresses:
- Number 5: Westcliff, Johannesburg comes in at an average price of R11 million.
- Number 4: Bantry Bay in Cape Town also with an average price of R11 million.
- Number 3: This spot goes to another Mother City favourite, Llandudno at an average price of R11, 2 million.
- Number 2: The city of gold strikes again with Sandhurst, with an average price of R14, 9 million.
- Number 1: And the winner of them all, coming in at a staggering average price of R19, 75 million is Cape Town’s finest, Clifton.