Africa-Press – South-Africa. In South Africa, renting is often seen as a financial “trap” that locks households out of wealth-building opportunities, as rising property prices outpace wages and limit access to capital assets.
While many South Africans dream of buying a home, renting is considered the cultural norm in other nations. In Germany, for example, even middle-class and wealthy households often choose to rent their homes for life.
This makes sense because of these countries’ high-quality rental stock, strong tenant protection, and different market structures.
“But in South Africa, you really shouldn’t be renting your home, unless there’s a strategic reason behind it,” said Sentinel Homes MD Renier Kriek.
“Renting tends to be a trap in the South African economy, because you can’t afford not to have exposure to large capital assets such as residential property.”
In South Africa, renting typically isn’t a lifestyle choice but an affordability or creditworthiness issue. The 2025 Ipsos Housing Monitor found that 89% of renters in the country would like to own their own home.
While 92% of South Africans believe everyone has a right to own their own home, nearly half struggle with housing costs.
The lack of affordable housing is enforcing a long-term renting cycle, trapping renters because they can’t afford to buy a home. This is the case even when South Africans’ monthly rent exceeds potential bond repayments.
Statistics South Africa’s 2024 General Household Survey recorded a drop in homeownership from 64.4% in 2022 to 60.1% in 2024. At the same time, it reported an increase in households that rent, growing from 22.5% to 25.1% during the period.
Adding to the problem is the fact that, according to Kriek, property prices have outpaced wage increases for the past 70 years.
“This is not only a South African phenomenon, but here it has the effect that 80% of South African households are already effectively priced out of the property market. Our housing backlog is around three million formal units,” he said.
He quoted French economist Thomas Piketty, who said if the real return on capital is higher than GDP growth, those with capital will become richer at a faster rate than those who earn wages.
Escaping the trap
Sentinel Homes managing director Renier Kriek
To escape the rental trap, Kriek urged renters to explore all possible options to buy property. He stressed that they should start saving early and not overspend on rent.
Putting down a larger deposit improves someone’s home loan eligibility, as the instalments must stay within 30% to 35% of their gross income. “Let’s say, this qualifies you for a R1 million home loan,” Kriek said.
“But if you have saved a R200,000 deposit, you can buy a R1.2 million house.” This should also reduce the buyer’s interest rate, saving them money and increasing their return on the property value.
A first-time buyer earning R3,500 to R22,000 per month may fit the criteria for the First Home Finance (FHF) Subsidy, formerly FLISP.
“It’s a brilliant government scheme that contributes towards buying or building your first home,” Kriek said. “Certain bond originators assist in securing the FHF, which would be the most frictionless way.”
Many employers also offer housing subsidies, sometimes with favourable loan terms, deposit assistance, or matched subsidies to qualifying employees.
Kriek stressed that renters should take advantage of any and all of these opportunities for support if they have the option.
Making homeownership more affordable
To make homeownership more affordable, Kriek suggested co-buying. This involves getting a partner – not necessarily your romantic partner – to purchase a residential property together.
Alternatively, Kriek recommended buying a “fixer-upper” house. “You generally get a larger uptick in value for making the renovations than buying an already renovated property. However, you’ll need cash as home loans don’t cover renovation costs.”
Another option is buying a house with an income-generating flatlet or garden cottage, which can be rented out.
The bond originator can include 60% to 70% of the projected rental income in the loan affordability calculation to help secure the loan. The rental income earned goes toward paying down the finance, saving on interest.
Buyers could also subdivide the property. “Many municipalities recently started to allow the building of more than one house on a single residential erf,” Kriek said.
That means that if someone buys an older property with a large backyard, they can sell the developable part of it or the right to build there to someone else.
This enables them to earn an extra income if they cannot afford to build the second or third dwelling themselves.
“Escaping the rental trap doesn’t necessarily require you to own the house you live in,” Kriek said. “Sometimes, this means buying properties that you don’t live in, or buying several smaller properties instead of one expensive one.”
For example, rentals are generally cheaper than bond interest at the higher end of the property market.
South Africans in this group might be better served renting and, rather than purchasing the house they live in, buying a less expensive property with a better investment case.
“Or instead of buying one house for, let’s say, R3 million, you could invest in three duplexes for R1 million each, in different areas, all earning income. This would spread your risk for the same value and provide more diversification benefit,” Kriek explained.
“The basic lesson is that if you’re investing in residential property to break free from the rental trap, your decision must be purely financial, not emotional.”
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