Buying

IT’S CURRENTLY CHEAPER TO BUY THAN TO RENT

The 2020 record-low interest rates have already encouraged many first-time buyers to enter the market, and for good reason.
author
Author
Kayla Ferguson
Contributors
less than a minute read
28 Aug 2024
Updated
01 Sep 2020
Published
Share
IT’S CURRENTLY CHEAPER TO BUY THAN TO RENT

The record-low interest rates have already encouraged many first-time buyers to enter the market, and for good reason. At the current interest rate of just 7% (prime), and with room for another cut before the year is out, it is possible that the monthly repayments on a home loan will cost less than the rent on the same property, making it cheaper to buy than to rent.

At the current interest rate of 7%, repayments on a R1 million home loan taken over 20 years would amount to just R7,753 per month. In many suburbs, that works out to be less than one would expect to pay in rent on the same home. For example, tenants can expect to pay roughly R8,500 on a 1-bedroom apartment in Rondebosch East. These kinds of homes usually sell for between R850,000 – R1 million, making the monthly bond repayment more affordable than rent on these properties.  

“There are so many opportunities for first-time buyers across South Africa right now. Those who want to stretch their budget even further should look for new developments to avoid the expense of transfer duties and related fees,” Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, recommends.

For example, there is a new development in Sedgefield, 1 On Cisticola, marketed by RE/MAX Coastal, where buyers can purchase a one-bedroom unit for just R595,000 or a two-bedroom unit for just R895,000 – with no transfer costs/duties. The rental for a one-bedroom unit is estimated to be between R5000 to R5500/month (9.25 % yield), while the bond repayments on this home at the current interest rate would be just R4613. The two-bedroom units could rent for R7000 to R7500/month (9.00 % yield), while the bond repayments on this home at the current interest rate would be just R6939.

“For those who can afford to do so, there really has never been a better time to enter the market than right now. I would just advise buyers to leave room in their budget for if and when the interest rates return to pre-lockdown levels,” Goslett concludes.

author
Author
Kayla Ferguson
Marketing & Communications Manager
Related Content
how to negotiate the best price on a home
Buying

How to Negotiate the Best Price on a Home

09 Jul 2025
5 min read
Buying or selling a home? Learn how to negotiate the best price and why working with a real estate agent can give you the upper hand in closing the deal.
an offer you can't refuse
Buying

An Offer You Can't Refuse

16 Apr 2025
4 min read
Once you’ve found the home that feels just right, the next exciting step is putting pen to paper and making an offer to purchase (OTP).
how do deposits work for first-time buyers?
Buying

How do deposits work for first-time buyers?

09 Apr 2025
2 min read
In addition to increasing the chances of your home loan being approved, there are many other reasons why a deposit will benefit you.