Deciding on the right real estate investment to make can be a tough decision. It is a significant and usually, a long-term investment, so great caution should be taken along with extensive research before making a buying decision. Knowing whether to buy or rent depends on certain personal and socio-economic factors. South Africa, Ghana, Nigeria, Kenya, and Cape Verde are some of the most common locations in Africa with great opportunities in real estate and home investments. For each of those countries, factors such as the population, cost of housing, and others play a role in influencing your buying decision.
Buying A House In Africa
If you’re thinking of buying a home in Africa, you should ask yourself some questions. Why? For what purpose? Is it for relocation or a vacation spot? Is it going to be for long-term or short-term purposes? Are you looking for a solid investment? The property market of different countries in Africa varies in different proportions. For example, the price of buying a home market in Nigeria has increased exponentially since 2015. Since 2000, the cost of homes in South Africa has increased every year in different percentages.
Benefits Of Buying Home In Africa
Buying a home simply indicates that you are ready to stay in the same location for an extended period and gives a sense of stability. As an investment, buying a home will pose a much lower risk than many other investment types.
- Housing Shortages In Africa
Africa holds a great history, including that of a turbulent past with various political and social instability. This has left most countries with a shortage of good housing. Rwanda, Nigeria, and South Africa have similar housing problems that their governments are trying to resolve. The focus on fixing the housing problem has created an opportunity for long-term structural growth in the property sector in African countries.
- High home Rental Rates
An escalation in inflation rates, coupled with higher interest rates, has made buying a home a more desirable investment than renting. Although in significant cities around Africa like Johannesburg, Lagos, Namibia, Accra, etc., buying a home is more than a fair percentage of an average individual’s annual income. However, there is always the option of bond payments and mortgage payments which allows you to make an initial large sum payment and continue to pay in installments over a long period.
- Top Holiday Destination
Africa has more than its fair share of aesthetic scenery with beautiful landscapes that accentuate colorful sunrise and sunsets, deserts, beaches, etc. various cities in Africa have become top spots for vacations and tourism. Cape Town, Cairo, Nairobi, Mauritius, Seychelles, etc., are some of the top vacation spots in Africa, with affordable properties available for sale.
- High Growth Potential
It is a known fact that lands and housing properties have an appreciating characteristic, coupled with the housing solutions that are giving an extra reassurance of the high growth potential of the property and home market in Africa. The increasing tourism rates are also an advantage as buying a home for lease or rent is becoming increasingly popular.
Disadvantages Of Buying A Home In Africa
- High Cost On Initial Payment
If you plan to buy a home in Africa, you need to be well aware of the initial payment cost. It is usually a percentage of the full amount before payment can start in installments. The initial payment for a home is usually called a down payment or a bond.
- Cost Of Repairs
Not all houses on the market are in the best condition for sale. Some houses have several internal and external repairs to make the house conducive for living. Although houses that need several repairs are usually cheaper on the market, the cost of the repairs and additional fixtures to make it appropriate for habitation may be above what you would have paid for an already fixed-up home.
- Period For ROI
If you are buying a home as an investment, either to resell or to rent out, the return on investment might be low, and before the initial capital is fully recovered, it takes a long period. Finding a buyer for the home may be difficult depending on the economic state of the real estate market in the country, just as finding a tenant may prove difficult as well for the same reasons.
Renting A Home In Africa
Renting a home is usually seen as throwing away money, but that is hardly the case because renting a home can also present opportunities for future planning and investments. Here are some of the advantages and disadvantages to consider.
Benefits Of Renting A Home
Renting a home is the best option if you don’t intend to stay in the same place for a long period. As a tenant, your commitment ends with the lease agreement, and you don’t have to worry about who is taking the next lease. If you have to move around a lot because of your job or other factors, renting a house will be the best option.
- Savings For Additional Investments
When renting a home, it is best to rent one within your means of income or below. This way, after paying for rent, you have additional amounts to save up for other investments.
- Low Cost On Insurance
The homeowner and not the tenant pay the insurance on a home. This way, the tenant only pays insurance on the actual content of the house. As a result, the cost of insurance paid by the tenant is minimal.
Disadvantages Of Renting A Home
- You’re Bound By The Lease Contract
When renting a home, you are bound by the rules of the lease contract that you sign. To some extent, this will have an impact on your usage of the property.
- Minimal Changes
As a tenant, you may not be permitted to make any changes or renovations to the home you rent. The changes you will be allowed to make will be very minimal and will not include structural change.
- Minimal Control Over Price Changes
Changes in the rental rates will sway according to the economy of the country. As a tenant, you cannot influence price fluctuations. When inflation occurs, and the prices of homes increase, you either adjust your budget to meet the new prices or find a cheaper alternative.
Whether to buy or rent a home in Africa will depend on the country, its property market, and other social and economic factors. Primarily, the decision depends on you, your needs, and the income available for a property decision.