At a time when more people than ever are renting, current market conditions favour the buyer, and there is a lot of movement happening within the country as people choose to relocate or change their lifestyle owing to changing and evolving workplaces, according to Paul Stevens, CEO of Just Property, weighs in on why investing in property can make you wealthier in more ways than one.
READ: How to avoid buyer's remorse when investing in property
Investing in property is not just about financial gain; it's about building wealth in various aspects of life. Property ownership can enrich your life emotionally, socially, and environmentally and contributes to your personal growth and lifestyle satisfaction.
Here are six types of wealth you should consider when looking at property as a wealth-building tool:
Emotional Wealth
One cannot put a price on the sense of security and stability that comes with owning a home. In uncertain times, the knowledge that you own your property can provide a sense of well-being and reduce levels of stress and anxiety. While a rental home may feel transient, your own home is a place that you can personalise to your heart’s content, somewhere cherished memories can be created. Peace of mind and the pride of homeownership cannot be underestimated. Studies have shown that homeowners often report higher levels of life satisfaction and self-esteem compared to renters.
Community Wealth
Homeownership is a step towards putting down roots, building connections and forging the relationships that foster a sense of belonging and support. Neighbours are connected by more than shared walls or fences; they become invested in one another’s well-being. As a homeowner, you have a reason to contribute to the growth, well-being, safety and pride of your community. Engaging in local events and initiatives not only enhances your neighbourhood but also builds a supportive network that can enrich your life.
Environmental Wealth
Choosing a property also means considering what is important to you in a broader sense. Does your impact on the environment matter to you? Sustainable living through property investments that support eco-friendly practices gives you the chance to reduce your carbon footprint and contribute to a healthier planet. You can go big: modifying an existing property to be more environmentally friendly and incorporating aspects such as water-wise gardening, water-saving appliances, and solar or other forms of renewable energy features into your home. You could also go smaller and simply focus on making your home a welcoming, peaceful environment, building up an “established” garden that you and your children will love to spend time in. Either option will increase the value of the property. (A poll of Just Property agents in 2023 found that house prices increased according to the lack of reliance on municipal services. For homes not reliant on the municipal grid for water, electricity and sewerage, values jumped, on average, by 16%.)
READ: Owning vs renting your primary home: Is investing in a secondary property the smarter move?
Legacy Wealth
It’s no secret that many of the world’s wealthiest people have significant property portfolios. This holds true in South Africa, too, because – despite our volatile currency and low economic growth – property remains a good investment. If you’re in it for the long haul, property offers opportunities for growth, value appreciation, wealth creation and the ability to leave a legacy for your future generations. Historically, property values tend to appreciate over time.
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty recently vshared that ti’s all too easy to get excited about a property and, driven by enthusiasm or the fear of missing out on what appears to be a good opportunity, to jump into a purchase, only to regret the decision later when it becomes apparent it wasn’t such a good investment after all.
“And it’s not an error that can be easily rectified. From unexpected repair costs and hidden issues to misjudging the neighbourhood’s appeal, there are numerous factors that can turn a promising investment into a burden, potentially one that cannot even be sold for a profit.”
However, Geffen says that buyer’s remorse can often be easily avoided with proper research, professional advice, a thorough evaluation of the property, and an understanding of personal financial limits.
Understand Your Financial Situation
“The first step in avoiding buyer’s remorse is to have a clear understanding of your financial situation. It’s easy to get swept up in the excitement of buying a property, but you must ensure that you can afford it not only in the short term but also over the long haul.
“Get pre-approved for a mortgage to know your borrowing capacity, and be mindful of other costs, such as property taxes, maintenance, and potential renovations.
“And don’t be tempted to stretch your budget too thin just because a house looks appealing. A sound financial plan will give you peace of mind and keep your emotions in check during the property search.”
Know Your Long-Term Goals
It’s essential to align your property purchase with your long-term goals. Are you buying a home to live in, or is this an investment property?
“If it’s for investment purposes, you’ll want to consider factors such as rental income potential, resale value, and local market trends. If it’s your future home, over and above the investment value, it’s important to consider how the property will meet your needs in the years to come, including space for a growing family or proximity to work and schools.
“By keeping your goals in focus, you’ll avoid the common mistake of purchasing a property that feels right in the moment but doesn’t actually fit your long-term plans.”
Do Your Research on the Market
“Property investments require thorough market research. Look at trends in the area you’re considering: are home values increasing, stagnating, or declining? Are there major developments planned nearby that could influence property prices? Understanding the local market will help you make a more informed decision.
“Additionally, research property types. If you’re buying a rental property, learn about the demand for rentals in that area, typical rental income, and vacancy rates. For a personal home, find out how other homes in the neighbourhood have performed in terms of resale value.”.
Personal Development Wealth
Steven continues that owning a property, or even going through the process of looking to become a property owner is a learning process. There are many administrative, financial and decision-making skills that are gained or improved in the process of property acquisition and ownership. These skills, knowledge and confidence contribute to your personal growth and financial literacy and provide you with the skills and confidence that can be applied in other areas of your life. When guided by a skilled property professional, the navigation of mortgages, sales and property management are experiences that enhance your competence and self-reliance.
Lifestyle Wealth
When you own your home, you are unconstrained by the rules of a landlord and are free to create a space for yourself that reflects who you are as an individual or a family. Although you may need to respect the regulations of a body corporate if you purchase in a complex, as well as the local bylaws, you can design a living space that speaks to your personal style and preferences. When you are in a home environment that is perfectly tailored to your taste and needs, it improves your quality of life and enhances a sense of well-being.
There is a right time to rent and a right time to buy, but no one can deny that when you rent a property, it is the owner who is benefiting from any appreciation of the property value while you are helping them pay off their bond/ earn an income from your rent. If you are planning on remaining in one place for a reasonable length of time, it may be to your benefit to consider buying rather than renting. However, it's important to assess your financial situation and market conditions carefully, as homeownership also comes with responsibilities and potential risks.
My advice to would-be owners is to look at the rental rates that they can expect to pay for a one-, two-- or three-bedroom property and compare these with the cost of ownership. Rent does not necessarily go up exponentially with the availability of an extra bedroom. By analysing the costs, you might find that owning a property could be more economical in the long term, especially when factoring in the potential appreciation of your asset.
If you are waiting for the perfect moment or the perfect home, you may not realise that you are missing out on an opportunity to create a legacy for your family. Property secures more than just fiscal wealth, it can act as a powerful tool for overall stability and well-being.
Consider taking the next step towards property ownership if it aligns with your personal and financial goals. Consult with real estate professionals, assess your readiness and explore the options available to you. Investing in property could be a transformative decision that enriches multiple facets of your life.
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