Buy or rent? Why first-home debate is becoming more complicated

Buying a home has long been one of the defining milestones of adulthood in Egypt. For generations, homeownership represented stability, financial security, and a store of wealth that could be passed on to future generations. But rising prices, changing lifestyles, and a growing range of investment options are prompting many young Egyptians to revisit that assumption and ask whether buying a first home still makes financial sense.

The debate is increasingly being shaped by affordability rather than preference. Speaking to EnterpriseAM back in January, Abu Soma Touristic Development Company CEO Ibrahim El Messiri warned that even upper-middle-income buyers begin dropping out of the market once home prices approach EGP 15 mn. "If you hit EGP 7 mn, we call it the sweet spot," he said, noting that quality products at that price point have effectively disappeared as construction and logistics costs continue to rise. Transportation alone can account for as much as 60% of material costs in some cases.

That affordability squeeze is forcing many would-be homeowners to consider renting for longer. What was once viewed as a temporary stage before buying is increasingly becoming a deliberate financial choice. The question is whether renting frees up capital that can be invested more productively elsewhere — or whether it simply delays wealth accumulation.

The case for renting

Young people should think differently about homeownership, psychologist, executive coach, and founder of the Financial Freedom Community Ahmed El Aawar argues. According to EL Aawar, primary residence should not automatically be viewed as an investment. “Today, renting is 100% better than buying — unless you're buying as an investment," he says. "Any home you live in is a liability, not an investment."

His argument revolves around opportunity cost. A young professional paying EGP 15k a month in rent may need to commit EGP 10 mn to purchase a similar property. Rather than locking up that capital in a primary residence, El Aawar believes it can be directed toward stocks, investment funds, business opportunities, or even personal development. "If I'm paying EGP 15k a month in rent, but buying that same home would require EGP 10 mn, EGP 12 mn, or EGP 15 mn, then renting is obviously the better option," he says.

The rise of new investment platforms has strengthened this argument. Previous generations had limited options beyond real estate, gold, and bank deposits. Today, fractional investing, digital brokerage platforms, ETFs, and investment funds have made it easier for individuals to build wealth without owning physical property. In El Aawar's view, the real investment is not necessarily the home itself, but the opportunities created by keeping capital flexible and productive elsewhere.

The case for buying

Tarek Abdel Rahman argues that homeownership remains one of the most effective wealth-building tools available to households. The Bonyan CEO points to a JP Morgan study covering global asset classes between 2011 and 2023. According to the study, average global inflation was around 4% annually during the period, while residential real estate prices appreciated by roughly 9% a year on average, excluding rental income and focusing solely on capital appreciation.

For Abdel Rahman, those numbers help explain why buying still makes sense. "Buying is always better than renting, because at the end of the day you own an asset," he says. Unlike rent payments, which disappear once paid, a home can be sold, borrowed against, or passed on to future generations. He argues that ownership provides households with both wealth accumulation and protection against inflation over the long term.

He also disputes the popular 'rent and invest the difference' argument. With developers increasingly offering installment plans stretching up to ten years, Abdel Rahman argues that the gap between monthly rents and ownership payments is often smaller than many people assume. If both options require a monthly cash outflow, he asks, why not direct that payment toward an asset that belongs to you?

Ownership also provides benefits beyond financial returns. Buying a home, Abdel Rahman argues, delivers family stability, predictability, and protection against future rent increases. "When you buy a home to live in, you're buying family stability and peace of mind," he says.

The answer depends on the numbers rather than ideology, economic expert and member of the Egyptian Association for Political Economy, Statistics and Legislation Walid Gaballah believes, arguing that ownership makes sense when mortgage installments are close to prevailing rental rates. In such cases, households can gradually build equity while maintaining a monthly housing cost similar to what they would have paid as tenants.

Gaballah says many Egyptians misunderstand mortgage finance. Too many people focus on the total amount they will pay over 15 or 20 years rather than the asset they are gradually acquiring. "The problem is that people take out a calculator and ask how much they will pay over 20 years. That calculation is wrong," he says.

He views mortgage finance as a form of rent-to-own rather than a traditional purchase. "You are essentially renting the property anyway," Gaballah says. "The fact that ownership eventually transfers to you after twenty years is an option in itself." In his view, households should compare the monthly cost of renting with the monthly cost of ownership rather than focusing solely on the headline price of a property.

A mortgage also preserves optionality in a way renting does not. "If you decide to leave halfway through the term, you can sell the property and recover part of the money you've already paid," Gaballah says.