Conventional wisdom suggests buying your own home is better, but renting is actually the best for some.

Buying a home is the most significant financial commitment that most people will make. Conventional wisdom is you should buy your home instead of paying rent that your landlord will use to pay off their mortgage. Conventional wisdom can be entirely wrong, so you should carefully consider your home-buying decision.

Residential property prices

Older people who bought their homes when they were young often believe their house was an excellent investment. House prices tend to rise marginally more quickly than inflation rates. That means the current price of their home is much higher than the purchase price because of the compound effect of inflation. But your house price could grow slower than inflation when you include the impact of transaction costs, property taxes, levies, maintenance and interest rates.

Some areas might experience periods of very high house price growth (Cape Town over the past decade), but the opposite can also be true. Just ask someone who has owned a house in the northern suburbs of Johannesburg over the past decade. Using recent house price growth as a reason for buying a home could be a mistake.

Time is important

How long you plan to live there is the most significant...