Explore the evolving perspective on property investment in South Africa as financial expert Bryan Nicol discusses the importance of understanding the distinction between a primary residence and an investment property in today's changing economic landscape.
Image: Supplied
The biggest mistake people make is assuming that property is automatically a good investment simply because property prices rise over time. What matters is the return you achieve after accounting for costs, interest, maintenance, rates and taxes, insurance, and the opportunity cost of tying up your money, according to Bryan Nicol, a certified financial planner professional (CFP®) and part of Doshguide.
For generations, South Africans have been told that buying a home is one of the best ways to build wealth. Owning property has long been seen as a sign of financial success and an important step towards a comfortable retirement.
But in 2026, the financial landscape has changed. Rising living costs, changing work patterns, and easier access to investment products have led many South Africans to question whether buying a home should still be the foundation of their financial plans.
According to Nicol, the answer is not a simple yes or no.
He says property remains a powerful tool for building long-term wealth, but people need to understand the difference between a home they live in and a property they buy as an investment.
“A primary residence is first and foremost a lifestyle asset that provides security and stability, while an investment property is purchased to generate returns through rental income, capital growth, or both. Although a home may appreciate in value over time, that doesn't necessarily make it the most effective retirement strategy," he says.
While a home may increase in value over time, it does not generate an income in the same way that retirement savings, shares, or other investments can.
"Unlike retirement savings, shares or other investments, the house you live in doesn't provide an income stream when you stop working. The reality is that when you retire, you still need somewhere to live. Unless you're planning to sell or downsize, that value isn't generating an income for you. It's a distinction that many South Africans overlook,” he says.
Research has consistently shown that diversification is important for long-term financial security. Studies by global investment manager Schroders have found that retirees who rely on a mix of assets, including retirement savings, investments, and property, are generally better prepared financially than those who depend on a single source of wealth.
At the same time, investing has become more accessible than ever. Low-cost index funds, tax-free savings accounts, and retirement products allow South Africans to start investing with relatively small amounts, often directly from their smartphones.
However, Nicol says property still offers unique advantages.
“Property remains unique because it combines an asset with a practical need: a place to live. For many households, buying a home creates financial discipline that might otherwise be difficult to maintain. Every bond repayment gradually converts debt into equity, building wealth over time,” says Nicol.
Whether buying a home makes sense depends on personal circumstances.
"Someone who plans to stay in a property for a decade or longer may benefit significantly from ownership. But a young professional who moves frequently for work, or someone buying in an area with weak property growth, may find that renting and investing the difference elsewhere delivers better returns," he says.
Location also plays a major role in determining whether a property becomes a successful investment.
"Property markets are highly localised. Over the past decade, we've seen significant differences in performance between cities such as Cape Town and Johannesburg, reminding investors that buying property is not enough and where you buy matters just as much,” he says.
Statistics South Africa's Residential Property Price Index supports this view. Between 2010 and 2022, residential property prices in Cape Town increased by 141%, compared with 71% in Johannesburg.
For Rory Brachner, founder of Doshguide, the decision to buy property should always start with a broader financial plan.
“For many South Africans, buying a home will remain one of the biggest financial decisions they ever make. But whether it makes sense as an investment depends on far more than market trends. It depends on your income, lifestyle, financial goals, retirement plans, and the role property plays within your broader portfolio.
"Too often, people start with the investment and then try to build a financial plan around it. The better approach is to start with a financial plan. Understanding where you are today, what you want your retirement to look like, and the goals you want to achieve along the way can help determine whether property should form part of that journey," he says.
Ultimately, property can still be an effective way to build wealth, but it should not be viewed as the only path to financial security. The best approach is to ensure that property forms part of a well-rounded financial plan that also includes savings, investments, and clear long-term goals.
PERSONAL FINANCE