Cape Town, with its striking natural beauty, vibrant culture, and growing economy, remains one of the most sought-after cities in South Africa to live in. Whether it’s the iconic Table Mountain or the trendy neighbourhoods like Woodstock or Sea Point, the Mother City offers an unparalleled lifestyle. However, deciding whether to rent or buy property in this bustling metropolis is a question that many residents and newcomers grapple with.
Deciding if it’s time to buy or rent can be a bit of a Catch-22 decision, states Lindsay Hennig, rental agent at Tyson Properties, Western Seaboard.
“Everyone has their own situations and scenarios as to what they feel best,” said Stephen Adamo, Double Diamond rental agent at Tyson Properties, Southern Suburbs.
With renting comes potential risks that will leave you asking questions like, “How much will my landlord increase the rental price? Will my landlord accept the renewal of my lease agreement? Will they continue to maintain the property in a timely fashion?”
These are all questions that run through the mind of a tenant at the end of a rental agreement.
One of the biggest perks of renting in Cape Town is flexibility. With renting, you’re not tied down to one location long-term, which is perfect for people who are new to the city or those who like to explore different neighbourhoods.
Renting gives you the freedom to understand the market in each suburb, because it can vary from area to area. You could live near the beach in Camps Bay one year and then move to the bustling city centre the next without worrying about the long-term financial commitment of a property purchase. “It’s a lot easier to move your property and your life from one space to another when you’re renting,” said Stephen.
This freedom to relocate easily also caters to the rapidly changing job market or lifestyle needs. For young professionals, creatives, or digital nomads, renting in areas like the Observatory or Woodstock, where Cape Town’s artsy vibe thrives, offers a dynamic lifestyle with no strings attached.
Renting typically requires less upfront financial investment than buying. When purchasing a home, you’ll need a hefty deposit, transfer fees, bond registration costs, and other associated legal fees. On the other hand, with renting, you generally only need a deposit equal to one or two months’ rent, making it far less daunting financially.
As a tenant, you’re not responsible for property maintenance or repairs, which can be a big money saver. Cape Town’s coastal conditions can cause wear and tear, especially in properties near the sea. This includes rust, dampness, or saltwater corrosion, which can add up in terms of repair costs for homeowners. When you rent, these responsibilities fall on the landlord, saving you both time and money.
However, as Liam Mally, Double Diamond rental agent at Tyson Properties, Southern Suburbs, said “water and bricks don’t fade”. Owning property in Cape Town will always be beneficial because it is a long-term investment as a result of the Western Cape being a high demand province. While renting gives you flexibility, you’re essentially paying off someone else’s bond. When you buy a home, your monthly bond repayments go towards owning an asset that can appreciate in value. However, when buying a home your monthly costs will increase due to rates and taxes, levies and maintenance costs in addition to your bond payment. These are things that people usually don’t factor in, explained Stephen.
Owning a home allows you to build equity, and in the right market conditions, you may even sell your property for a profit in the future. Real estate is often considered one of the most reliable ways to build wealth, and Cape Town’s unique market makes it an attractive option for property investors.
Even owning land or ‘erf’ in Cape Town itself, is an investment. Liam stated that erf sizes are getting smaller, but you are paying more per square metre, and they will just keep increasing as space in Cape Town becomes limited.
One thing you have to be aware of when buying is that you might potentially be paying above market value for a home because there is such a high demand in rentals and sales. If you aren’t familiar with the market the only way to truly know that a home is priced correctly is to speak to an experienced property practitioner. “They will be able to guide you on whether you are overpaying or not,” Liam stated.
Owning your home provides a level of security that renting doesn’t. As a tenant, you’re subject to rental increases, changes in ownership, or even the possibility of your landlord deciding to sell the property, explained Stephen. When you own a home, you have full control over how long you stay, how much you pay (excluding interest rate fluctuations), and what renovations or changes you’d like to make to suit your preferences.
Cape Town is a top tourist destination, which opens up the opportunity for property owners to earn passive income through short-term rentals. Whether you own an apartment in the City Bowl or a holiday home along the False Bay coast, the booming Airbnb market offers potential income streams. This is particularly beneficial during peak tourist seasons, when demand for rental properties skyrockets.
Market Conditions: What You Should Consider
Interest rates play a crucial role in deciding whether to buy or rent. South Africa’s interest rates have seen a slight decrease in the last year with two further decreases expected next month and early next year. Prospective homebuyers need to carefully assess whether they can afford these payments, especially in Cape Town, where property prices can be high. “Rental properties have become more expensive than they have been in the past because of the lack of availability,” states Lindsay XXX.
Lindsay continued to explain that those who are renting are trying to hold on to what they have because the chances of finding another can be a challenging process.
Renting may be the safer option during periods of high interest rates, as it offers financial stability without the risk of fluctuating bond repayments. However, if interest rates are lower than ever, it might be the perfect time to buy and secure a more favourable bond agreement.
However it’s important to keep in mind that with waiting to buy, the market might not remain as favourable as it is now.
According to Liam, people who already live in Cape Town are buying because they are already here, whereas people who are coming from other parts of the country are renting to first get a feel for the market.
Whatever you choose, Cape Town remains an exciting city with endless opportunities, whether you’re renting or buying. Carefully assess your needs, financial capability, and future plans to make the most informed decision in one of the world’s most beautiful cities.
“If you can, buy. But I would suggest renting if you want to become more familiar with the area,” concludes Liam.
