Some banks have adjusted their lending criteria to make it easier for first-time homeowners to qualify for a home loan.
But for most people struggling with the high cost of living, being approved for a home loan is “becoming tough”.
Agents are seeing a “considerable amount” of people renting instead, says Jacqui Savage, national rentals manager of Rawson Property Group. “While we are in a very tight economy , the rental market is still showing good growth.”
In particular, renting instead of buying is popular with students and young professionals due to affordability and responsibility of owning property, says Knight Frank’s Lisa Connellan.
Often the areas of their choice, close to work, are unaffordable for these aspiring buyers while properties in their budgets might involve a lengthy travel time.
“Young families might also prefer to rent rather in the current economic climate as properties suitable for their growing family needs are more affordable to rent than the bond repayment.”
The rent versus buy decision is based on factors such as affordability and life stage, especially for young people entering the job market and not wanting to commit to a permanent city based on where they will work, says Herschel Jawitz of Jawitz Properties.
The Millennial market, especially in the US, has shown tendencies towards renting based on lifestyle choice and questioning the need to invest in a permanent home.
“In South Africa, you have unique factors such as emigration, which means people may rent until they’ve decided whether to stay or leave. In areas like Cape Town, where property prices far outstrip equivalent rental prices, people may rent in a better area than that in which they could afford to purchase.”
Jawitz says younger people starting a family or entering the job market are most likely to rent. “Flexibility to move or relocate, affordability and not wanting to commit to a more permanent lifestyle would be the key factors.”
Two decades ago, buying property was a rite of passage towards which most strived, says Adrian Goslett, regional director and chief executive Re/Max of Southern Africa.
Today, households across the globe are choosing to remain in the rental market. Affordability is a key factor in this decision.
Data shows that of the 16.6 million households in South Africa, only 6.7 million houses are registered at the deeds office, meaning 10 million people either live in informal accommodation or rent.
“Markets across the globe are reflecting growing disparities in numbers between those who rent and those who own.” Goslett still believes owning will bring greater financial security than life-long renting.