The average age of South Africa’s first-time homebuyer has increased over the last decade, and this shouldn’t come as a surprise. While the benefits of homeownership as a pathway to financial prosperity are well known, life for millennials (people born between 1981 and 1996) has never been more expensive – or more uncertain. REALGLEN Properties looks at the facts around buying and renting and why it’s sometimes better to be a tenant than a homeowner.
Financial shifts and changing priorities
Rising prices are part of our everyday life and we tend to turn a blind eye to them over time, accepting that we just have to pay the higher prices. However, when you stop to think about how rising costs and inflation have affected young South Africans, the figures are staggering. Rewind 20 years to 2005 and the petrol price was fluctuating between R4 and R6 per litre. We’re now paying more than R20 per litre – an increase of around 300% in 20 years. That’s just one example of how life has become more expensive – and millennials’ salaries have not kept pace.
Here's another factor that may make millennials think twice before signing an offer to purchase agreement: many are considering taking up opportunities overseas. The number of South Africans living overseas almost doubled between 2005 and 2020, with numbers continuing to rise. Buying a home if you’re likely to emigrate in the next five years doesn’t typically make sense.
Delving deeper into millennials’ preference for renting
Millennials are often described in the property industry as “rentvestors” rather than investors. In the uncertain world in which they are trying to pave their paths to success, the need for flexibility has never been more important. Job changes for career advancement are a high priority, and the back-to-office trend means that telecommuting is no longer an option for most South Africans. Millennials are thus looking for living arrangements that support flexibility and allow them to move if necessary, with relatively short notice.
Globally, millennials are choosing to rent rather than buy for a variety of economic and social reasons. In many countries (including South Africa), property prices have risen far more sharply than salaries, making it tougher for this generation to take their first step on the property ladder. The fact that the 2008 global financial crisis hit many millennials just as they entered the job market means that many have struggled to establish their careers. Freelancing and “gig economy” work have reached unprecedented levels, which makes long-term financial planning challenging.
The advantages of renting
While the advantages of homeownership are often talked about, there are also many plus sides to being a tenant. For starters, it’s a more affordable way to live. If you’re living in a sectional title, you won’t be responsible for paying levies. You also won’t be required to pay for your home’s structural maintenance and repairs. Over and above this, you don’t have to put down a sizeable deposit or pay transfer duties and other legal costs.
The fact that you have fewer financial obligations as a tenant may mean that you’re able to live in a more desirable neighbourhood. This may mean that you’re able to live in a bustling urban centre or rent in a lifestyle estate. Lower expenses mean greater choices available for you and your family.
Renting makes it easy to relocate for a job, travel or lifestyle reasons. You’re not tied to bond repayments and you don’t have to sell a property if you want to move. As a tenant, you also don’t run the risk of losing money if property values drop in the area that you’re living in.
REALGLEN Properties supports all millennials, whether they’re looking to buy or rent their property in Gauteng. If renting suits your lifestyle and requirements, get in touch with our talented team of rental experts today.
