A brand-new addition to your family means that you are considering your “space”, and what the imminent pitter-patter of tiny feet means to your existing living arrangements, either consciously (it’s penciled in as a priority on your ever-growing to-do list) or perhaps even unconsciously.
“Now that we are expecting, do we need to move into a bigger place?”
Sometimes, parents-to-be simply don’t have a choice in the matter. If you are currently hunkered down in a hip studio flat in the centre of Cape Town CBD, then you might be able to get away with an inexpensive crib and assembling a portable camp cot in your modern-chic abode.
But it’s a temporary solution and eventually, your baby will turn into a toddler and quickly beanstalk into a young child who, much like all of us, need their own space.
So, the “we need more space” discussion is very much on the table for most parents as soon as they find out they are pregnant.
And like most big decisions we end up pondering over, the “do we buy or rent something bigger”. Answers aren’t always that easy to find, because they involve a major financial commitment either way.
Before you can even consider an upgrade on your square meters, you have to consider if you can afford it? It seems like an absolute no-brainer, but most people don’t even have a monthly budget to balance their Rands and cents. Deciding to somma move into the semi-detached white picket spot in the leafy suburbs, close to some good schools, is financial suicide if you are not 100% sure you can afford it.
Once you’ve worked out what you can afford, you have a far bigger decision to make – Should you rent or buy?
It’s an age-old question that’s been hotly debated.
In the “buy” camp you have a solid argument that investing money into your property makes far more sense over the long term, than renting, because the property is yours and it’s an appreciating asset (increases in value over the years).
If you buy a property today for R1 500 000 it might be worth R3 000 000 in 15 years from now and if your bond is paid up at that stage, you may be R3 000 000 richer.
Makes sense, doesn’t it?
But what about the other side of the coin?
In the “rent” corner you have a counter-argument that also can’t be ignored. The rent-don’t-buy crowd will lay down their case, which suggests that owning a property is a money pit and once you have calculated all the costs involved in the day-to-day running of a house (building and contents insurance, security, garden and pool maintenance and the general upkeep costs) you aren’t making any money especially if you factor in the real risk that your property might depreciate rather than the expected year-on-year gains you are banking on.
If you buy a property for R1 500 000, who can guarantee it will even be worth R1 500 000 in 15 years from now?
There are good points to be made for both sides of the argument, and ultimately the decision is a personal one that relies heavily on several personal factors. These are a couple of questions you and your significant other should debate:
- Do we want to be locked into a 20-year bond?
- Have we considered the real costs of buying a house?
- Have we considered the costs of running a house?
- Where are we planning to school your children?
- What happens if our employers need us to relocate?
Interest rates are low and it’s very much a buyers’ market at the moment, so if you are considering upgrading your living space because you have a new addition to your family, now is a very good time to go shopping for a new property.
The COVID pandemic and a pancake flat South African economy mean a lot of people are staking “For Sale” signs outside their front lawns. It’s almost impossible not to notice how many homes are up for grabs if you take the time to weave in and out of your local suburb on a Sunday afternoon.
There is no right or wrong answer when it comes to the rent or buy debate. The right decision for you and your new family is one based on a decision that makes the most financial sense for you.
We would like your comments on the whole rent or buy debate, especially if you have a young family and are considering an upgrade to your space.
Please feel free to leave a comment below.
Until next time.
The Wise About Life team