When deciding between housing options, it is important to compare what is available within your given price range. In certain price ranges, it is possible to rent a home with greater floor space than to purchase the home.
A bond on a R1 million home amounts to R9 000 per month. “In the major metropoles in South Africa, it can be challenging to find a spacious home for below R1 million. Our latest Housing Report revealed that the nationwide average price of freehold homes is R1 422 901 and R1 049 437 for sectional titles,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
“This makes renting possibly a more appealing option for those who have less than R9 000 per month to spend on housing,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
SEE: Rent vs buy | What R12k gets you in Gauteng, Cape Town and Gqeberha
Nadia Aucamp, Broker/Manager of RE/MAX All Stars says that in the Alberton area you will be lucky to find a freestanding house for R1 million, but you will definitely be able to find a two- or three-bedroom townhouse of approximately 100sqm. The units might have a small garden, although the bigger two-bedroom units will be on the first floor of the complex.
On the rental side, Aucamp explains that you will be able to rent a slightly bigger 120sqm townhouse or small home for roughly R9 000 p/m. “The houses will be in Mayberry Park, Brackendowns or General Alberts Park area, usually offering three bedrooms and one bathroom with one living area. If you are looking in a complex, you might find a modern two-bedroom unit in Meyersdal or New Redruth with one bathroom and a possible garden.
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In Germiston, she says you will be able to buy a house for R1 million in Elsburg or Tedstoneville. “These houses will offer three bedrooms with one bathroom and one living area. When looking at the rental side, you could find a similar house in Elsburg, Testoneville and Mimosa Park for R9000 p/m.”
For R1 million, she adds that buyers could also have the option to buy a modern townhouse inside the Stone Arch Complex with three bedrooms and two bathrooms or a two-bedroom, two-bathroom unit on the ground floor. “The rentals for these units will be slightly cheaper than your monthly repayment. Rentals available in smaller complexes will offer three bedroom and two bathrooms but these will not be as modern as in the Stone Arch Complex.”
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Chahid Haigh, Broker/Owner of RE/MAX Elite explains that a rental in the Southern Suburbs of Cape Town, R9 000 will afford the home seeker an average home with two to three bedrooms, a garage on an average sized plot of about 500sqm, situated usually north of the M5 (basically Ottery and surrounds).
Further South, towards False Bay, Haigh one may find a starter home with two bedrooms on a small plot with parking for one or two cars or a two-bedroom apartment with 1 open parking bay.
He adds that the homes in these areas sell from R1.5 million and up. One could find an apartment for close to R1 million, but it will be a small, modern apartment without a garden, open parking for one vehicle and not much else.
“The distinct difference between buying for R9 000 and renting for the same amount is that R9 000 p/m on a bond equates to probably another R2 500 p/m on rates and utilities. An expenditure of R9 000 p/m in total will drop the buying power down to a bond of approx. R 680 000 and there is hardly anything available in the Southern Suburbs for that amount, except for the Cape Flats.
However, Haigh mentions that rental properties in the R9 000 price range are usually let within a day or before it gets to market on account of the waiting list of good prospective tenants. “Tenants experience huge frustration because of this type of demand. The sooner a tenant can move into the buying space, the better because house prices are moving rapidly out of the affordability range for most, and is further exacerbated by the ever-increasing interest rates,” Haigh recommends.
Click here to see all the sale and listing price trends in Southern Suburbs
When weighing up the options, buyers are reminded that purchasing a home is an investment while renting a home is purely an expense. “Purchasing property is expensive but, as an appreciating asset, it will help to generate future wealth. Finding an affordable rental while saving up to afford to purchase a home is a wise approach for those who are unable to afford the purchase right now. Speak to a local RE/MAX agent to find out more about property prices in your area so that you know how much you will need to save,” says Goslett.
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*Property24 Listings Data Disclaimer: The trends detailed in this article are based on Property24 listings, current at the time of publishing, and property transfer data supplied by Deeds offices, which typically take 3-4 months to reflect. Suburbs are listed according to Property24's geographical database. In some areas this will include both commercial and residential properties. The age demographic data of buyers, sellers and stable owners is determined over a six-month period. These Property Values should not be used as a substitute for independent professional advice and is subject to Property24.com Terms and Conditions.
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