Rethinking the Renting Debate - 05-26-09

May 26 - It's a dilemma that many people find themselves in today. Should they buy their dream house or continue renting until times improve? The prices are now low enough for many people to afford a home, yet the majority find they do not have access to credit. Should they try harder to get money from other sources, or should they wait out the recession and buy with better terms through the lending institutions? These are undoubtedly questions that continue to go through many minds these days, and unfortunately, there is no right or wrong answer.

First to the facts: "Access to credit has become almost impossible without having saved up to 20% of the value of the home you want to buy," said the Managing Director of Sanlam Home Solutions, Piet van der Walt

With that in mind, many people really have no choice but to continue renting their current properties until they are able to save up for a deposit.

Yet, even with the deposit, is it the right time to buy?

The advantages of owning a home are many: Buying property ensures that you have invested in a long term asset that will in all probability perform well down the line. Owning your own home usually brings with it greater flexibility in terms of choosing your own decor, and the home can always serve as security if you need funding for other ventures, such as opening a new business and so forth.

On the other hand, owning a home means a lot of responsibility, as cash liquidity suddenly dries up and you will need to cover home loan costs such as rates and taxes and insurance.

There are advantages to renting, of course. Flexibility, minimal costs over and above the actual rent and no burden of rates and taxes means that renting is an appealing option for many people.

However, renting also means that the landlord may be reluctant to maintain the property and you have no return on your investment.

Each individual needs to look at his or her own personal and financial situation and decide what path to take at present.