Renting: A smart and cost-effective option amid hiked interest and inflation rates

Renting: A smart and cost-effective option amid hiked interest and inflation rates

South Africa’s current economic climate has made the rental market a smart and practical option. In fact, the rental market in the Western Cape has remained strong throughout the first quarter of 2016, even within the top-end rental bracket which reaches up to R120 000 per month in blue chip locations such as Constantia, Camps Bay ,Clifton and Bishopscourt.

Our economy is witnessing rising inflation and interest rates, slow economic growth and a notable decline in expendable income. These factors are serving to increase the demand in rentals which was once seen as a short-term plan. Fortunately, this is no longer the case as renting is now considered beneficial due to its innate flexibility and affordability in these challenging economic times.  

The benefits of renting are multi-dimensional and include: A significant increase in spending power and savings, security against a volatile market and peace of mind.

Considering the high costs that accompany owning a home- rentals represent a cheaper option. To buy a home requires a 10% deposit of the purchase price whilst a deposit to rent a home is normally equal to one month’s rent. Traditionally, a tenant is only liable to pay a fixed monthly rent and light and water, this results in more expendable income to spend or save.

In addition, renting offers protection from a volatile market due to monthly rentals only increasing once year in comparison to bond repayments which is linked to the increasing or decreasing of interest rates. At the beginning of 2016 The Reserve Bank increased lending rates by half a percentage point, this means South African homeowners will fork out more money to repay their bond.  

Finally, renting promotes convenience and mobility as in the case of changing jobs or locations. Leaving the rental property is easier than selling off your property. At the end of the lease or notice period a tenant can vacate the property. 

While purchasing your own home allows for wealth accumulation, the present economic environment is urging consumers to choose cost-effective options.

Coastal Property Group has a stunning range of residential properties available to rent in the picturesque Western Cape. For a comprehensive view of listings please click here.