Renting vs owning: Is buying property the right move for young adults?

Estimated read time 2 min read

By Samkele Mchunu

Young Adults Face Challenges and Opportunities in South Africa’s Housing Market

For many young South Africans, achieving financial independence often leads to the question of homeownership. According to Lightstone information solutions, a significant portion of first-time buyers, 70% to 71%, fall within the age group of 35 years and younger.

While owning a home offers stability, security, and the potential for personalization and appreciation in value, it’s crucial to understand the long-term financial commitment involved, says Sarah Nicholson from JustMoney.co.za.

“You need a stable income, good credit score, and a realistic budget to factor in repayments, insurance, and maintenance,” Nicholson advises.

Careful planning is especially important as some lenders may be hesitant to grant home loans to applicants under 35. Here are some tips from Nicholson to boost your deposit savings and increase your chances of getting a home loan:

  • Create a budget and savings plan
  • Set achievable goals and milestones
  • Automate savings transfers
  • Reduce unnecessary expenses
  • Explore side hustles or freelance work
  • Invest windfalls and consider low-risk investment options
  • Maintain a good credit score
  • Seek guidance from financial professionals

Lifestyle Considerations

Before buying, examine your lifestyle needs. While a cheaper property might seem appealing, it may not be ideal in terms of location, size, or proximity to amenities. Lightstone notes a decrease in the number of young South Africans buying homes since 2018. However, those who do invest are spending more, with 36% of buyers aged 26 to 35 paying between R1 million and R3 million in 2023.

Here are some lifestyle factors to consider when choosing a home:

  • Space for current and future needs
  • Outdoor space for pets or activities
  • Commute time and access to necessities
  • Safety and crime statistics in the area
  • Future development plans in the neighborhood

Market Trends and Long-Term Investment

While lower housing prices can offer an entry point, it’s important to understand the reasons behind the decline. Reduced prices might be due to infrastructure issues or a stagnant economy, which could further impact property values. Nicholson advises young buyers to conduct thorough research and seek professional advice before making an offer.

“Despite the challenges, homeownership remains a valuable goal,” says Nicholson. “With careful planning and a clear understanding of the market, young adults can navigate the complexities of buying a home and secure a more stable future.”

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