Four ways to house yourself over a 30-year horizon, compared on the wealth each leaves you with at the end. Both renting paths invest the money a purchase would have tied up; every path spends the same yearly housing budget, so the winner is whoever holds more at year 30.
Not financial advice — this is an illustrative model; all shared assumptions sit in the "Assumptions" panel below for detail.
Assumptions — shared across all four scenarios
Key insights — how to read these results
Net worth = property equity + investments. Each scenario box adds the two together; open its cash-flow table to see the split. A path can hold a more valuable house yet a lower net worth, because most of that house is still owed to the bank.
1. Buy & hold is hard to beat — because the budget is fixed. Every path spends the same yearly housing budget, so net worth becomes a tug-of-war between spending on housing and investing the rest. Buy & hold spends the least — the cheapest home, on a bond that inflation quietly erodes while the budget keeps growing — so it invests the most. Net worth follows the investment pot.
2. A bigger house is worth more, but you own less of it for longer. The upgrade home's value grows faster in absolute terms. But it's bought later on a fresh bond, so for much of the period you own less of it than its price suggests, and its running costs starve the investment pot. Its equity only overtakes the starter's once the bond is well paid down — which is why the "buy bigger" paths look much better at 30 years than at 20.
3. Borrowing above the growth rate destroys wealth. When the bond rate (here 10.5%) sits above property growth (6%), every extra rand borrowed to hold a bigger house costs more in interest than the asset gains. Drop the bond rate below property growth and the "buy bigger" paths improve sharply.
4. The fair fight is Scenario 2 vs Scenario 3. Both end in the same upgrade house, so only the route differs. Renting first usually edges out trading up, because trading up pays transfer duty and conveyancing twice (plus selling costs) while renting buys only once.
5. It's a bet on returns vs property growth — and it ignores enjoyment. Higher investment returns (or lower property growth) favour the renting-and-investing paths; the reverse favours owning. And the model measures wealth only — it can't value the extra space or comfort of a bigger home, so "buy cheap and invest" will always look strong on the numbers alone.
Scenario 1 — Buy & hold — cash flows
| Year | Bond repayment | Rates | Insurance | Maintenance | Total housing | Invests | Property equity | Investment value |
|---|
The owner invests the gap between the housing budget and their (falling, in real terms) ownership cost.
Scenario 2 — Buy, then trade up — cash flows
| Year | Home | Total housing | Into investments | Property equity | Investment value |
|---|
Highlighted year is the sell-and-rebuy point; a figure in (brackets) is drawn from investments to sustain the bigger home.
Scenario 3 — Rent, then buy — cash flows
| Year | Status | Housing outgo | Into investments | Property equity | Investment value |
|---|
Highlighted year is when renting stops and the upgrade is bought; a figure in (brackets) is drawn from investments.
Scenario 4 — Rent for 30 years — cash flows
| Year | Rent | Invests | Investment value |
|---|
The renter invests the upfront cash a purchase needs on day one, then the gap between the budget and rent each year.
Common-budget basis: the yearly housing budget starts at the higher of owning-the-starter or renting in year one, and grows with cost inflation thereafter. Every path spends its own housing cost and invests the slack (or draws from investments for any shortfall). Investment growth is net of income tax each year, with CGT on the capital-growth portion at sale. Bond payments are annualised; home improvements aren't added to the CGT base; the two "buy bigger" paths measure wealth only and don't price the extra enjoyment of a larger home. Directional, not a quote. Not financial advice.