Podcast: Property vs Renting in 2025

Property Investment vs Renting: A Fresh Perspective

The podcast challenged traditional wisdom about property ownership in South Africa. The Finance Ghost shared his detailed analysis of the rent-vs-buy decision, revealing that house prices would need to grow by approximately 7.5% annually just to break even against a strategy of renting and investing the difference.

Key insights on property investment included:

• Property should be viewed primarily as a lifestyle asset in South Africa
• First-time buyers often enter the market when interest rates are lowest, creating vulnerability to future rate increases
• The importance of stress-testing affordability at higher interest rates over a 20-year period
• The hidden costs of property ownership, including municipal rates, taxes, and maintenance  
   

Using Property ETFs in a Tax-Free Savings Account

A notable investment strategy highlighted was the use of tax-free savings accounts (TFSA)**, that include property ETFs, such as the Satrix Property ETF, to gain exposure to the property market without direct ownership. This approach offers several advantages:

• Tax-free dividends from Real Estate Investment Trusts (REITs)
• No Capital Gains Tax on property market gains
• Greater liquidity compared to physical property
• Diversified exposure to the property sector

The Finance Ghost shared his personal strategy of using the Satrix Property ETF in his tax-free savings account as a hedge against rising property prices, noting that listed property often correlates with residential property trends while providing regular dividend income and maintaining liquidity.  
 

Digital Wealth and Investment Trends

Duma Mxenge highlighted emerging trends in digital wealth management:

• Growing interest in digital-first investment platforms, particularly among younger investors
• Evolution toward hybrid models combining digital platforms with human financial advice
• Increasing demand for personalisation and seamless transactions
• Rise of neo-brokers and telco companies entering the investment space  
   

Market Outlook 2025

The discussion provided valuable insights into market expectations for 2025:

• South African market shows potential with favourable tailwinds including lower interest rates
• Resources sector expected to perform well
• US technology sector continues to show strength despite valuation concerns
• Chinese market stimulus efforts warrant attention
• South African banks might outperform US counterparts due to potential interest rate cuts  
   

The podcast emphasised several key points for investors:

• The importance of diversification beyond emerging markets
• Maximising tax-free savings accounts with strategic ETF choices
• Considering listed property (REITs) through vehicles like the Satrix Property ETF
• Time horizon crucial for investment decisions - money market funds preferred for shorter investment time horizons under three years
• Platform businesses (tech companies) maintain strong growth potential despite high valuations  
   

Insights from The Finance Ghost

The Finance Ghost shared his personal three-year property planning tips:

• Living according to potential future bond payments while renting
• Investing the difference between rent and potential bond payments
• Using listed property investments as a hedge against property market growth
• Focusing on money market investments for the house deposit
• Maintaining long-term equity exposure through tax-free savings accounts  
   

Emerging Market Considerations

The discussion highlighted key factors for emerging market investors:

• South African market sensitivity to global risk sentiment
• The impact of US Federal Reserve decisions on local interest rates
• Opportunities in local banking sector amid potential rate cuts
• The importance of maintaining offshore exposure for diversification  
   

Conclusion

The discussion highlighted the evolving nature of investment strategies in 2025, emphasising the importance of careful analysis in property decisions and the growing role of digital platforms in wealth management. For South African investors, the key takeaway was the need for balanced, well-researched investment approaches that consider both local and global opportunities, while making strategic use of tax-efficient vehicles like TFSAs and ETFs.

This episode of Ghost Stories provided valuable insights for investors navigating the complex landscape of property investment and market opportunities in 2025, while highlighting the growing importance of digital wealth management solutions and tax-efficient investment strategies.

Click here to listen.

*Satrix is a division of Sanlam Investment Management

**Tax Free Savings Accounts: Annual limit of R36 000, lifetime limit of R500 000, 40% tax penalty applicable for contributions above the limit, per individual.

Disclosure

Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.

Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS.  While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.