Just had a surreal thing happen. I am a trustee in my complex and friendly with a few people. One resident of the complex told me she had friends that wanted to rent inside the complex so when my neighbor moved out into a larger house and said he wanted to rent his unit out I put them in touch with each other. Turned out the rent asking price was too steep for the couple. When I inquired how much the rent was it was R8000pm for a 120sqm place. I know for a fact that the property itself is worth about R900K to buy. Levies would be around R1300 I guess.
The thing that boggled my mind is that I have a similar sized unit that I bought two years ago and the rent is significantly more than i pay for my bond + levies + electricity + property tax. Is rent getting crazy high right now or is it just me? From what I have seen property prices have been flat for the past 2-3 years yet rent keeps going up by 6% each year. It now seems its cheaper to buy than rent! It really can't keep going like this. I mean who can afford that kind of rent for a little 3 bedroom unit???
Checking the maths if you bought a 900K place with a 10% deposit and prime -1.5% you would pay R6500 pm. Add R1300 for levies and R400 for property tax and you are paying R8400 pm. That is so close to the rental its ridiculous. Even if you got the loan at prime it means the debit order would be around R7200 pm. Even if it works out a little more than renting within a few short years inflation will "lower" your monthly repayments while increasing rent dramatically. Seriously. Why rent unless you know you are not around for long? The only reason I can think of is that people can't get the deposit saved up perhaps or can't get bond approval? Curious to know from anyone who is renting what is holding them back? Do you prefer renting or would you like to buy but can't due to some reason?