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Renting vs buying: Why buying is better in 2024

Buying provides you with a powerful asset that appreciates in value, and you often pay less in home loan repayments long-term than you would in rent.

 

Renting vs Buying

Article summary

  • Buying provides you with a powerful asset that will appreciate in value over time.
  • In many cases, you’ll pay less in bond repayments than you would in rent over a prolonged period of time.
  • Interest rate hikes are likely to cease in 2024, and may even be reversed.

Congratulations! You’re thinking about buying your first home.

While you may be a little apprehensive about taking “the next big step”, rest assured that it’s a step in the right direction. Owning your own home has distinct advantages over renting, and it’s easier to obtain a home loan in a climate where banks are competing for customers.

A powerful asset

A home is the most powerful asset you’ll own. It provides security and can be passed down through the family.

A home appreciates over time, so you’ll make a profit if you do choose to sell it at some point.

Here are some of the reasons why buying is better in 2024:

Interest rates in 2024: Why they’re good for buyers

Interest rate hikes have made things difficult for buyers in the past couple of years.

However, experts predict that the hikes may come to an end and may even be reversed.

This theory is supported by the South African Reserve Bank’s decision to leave the interest rate unchanged in September 2023. So it remains at its May 2023 rate of 11.75%.

Competition between banks

Supply currently outstrips demand, and banks are more willing to lend.

In such a climate, banks are more willing to grant home loans, including packages like the 100% home loan, which removes the need for a deposit (a major obstacle for first-time homebuyers).

Advantages of buying

  • If the value of a rented property rises, you have to pay more in rent, whereas if the value of a purchased property rises, you have more home equity to draw on.
  • Paying rent means paying off someone else’s home loan when you could be paying off your own.
  • Home loan repayments remain the same whereas rent may increase as your landlord chooses.
  • A purchased property is yours to live in for as long as you want. You don’t have to worry about being evicted by a landlord.
  • A purchased property is yours to alter as you see fit, so you can reforge the home in your image, whether through renovations or through less dramatic measures like changing the decor.

Subsidies for first-time homebuyers

Another reason buying is better than renting in 2024 is that the government offers subsidies for first-time homebuyers with low incomes.

Specifically, First Home Finance (formerly known as FLISP) provides a subsidy to first-time homebuyers with an income ranging from R3 501 to R22 000 per month.

The subsidy ranges from R38 878 to R169 264 depending on your income. If you fit the criteria, find out how to apply for First Home Finance with ooba Home Loans.

Avoid the rent trap

Even if you’re a young professional, taking your first step onto the property ladder makes more sense than renting.

Experts say that it’s best to get on the property ladder as soon as possible.

Many younger people fall into the trap of assuming they can’t afford a home purchase. They risk falling into the rent trap; paying more rent over a period of time than you would’ve paid for a bond.

Improve your chances of home loan qualification

Getting prequalified will give you an idea of what you can afford, so you can house hunt within your means.

Targeting homes you know you can afford in turn improves your chances of home loan approval.

Prequalification will assess your credit record (the most important factor when applying for a home loan).

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.

Get prequalified for a home loan today

DIY with our online prequalification tool, or speak to an expert.

GET PREQUALIFIED

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Simply The Best

Ooba home loans services are simply the best. My Consultant Bianca Dancer was so hands on and helpful from the get go. She guided me through the entire process and put me at ease being a first time buyer. I highly recommend their services.

Tia J

Excellent Service

Jay Govender and Maleshini Reddy from OOBA provided outstanding assistance and guidance in securing our home loan. Response times were excellent and they were professional and friendly.

Brice G

Bond Application

Estelle Vorster was really helpful in securing the best deal for my home loan, she not only negotiated a lower interest rate she went as far as securing 50% discount on the transfer costs.

Butana M