We all love to dream about our perfect home, but is it better to hunt for that already existing property or should you build your very own dream house from scratch?
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, this decision hinges around several factors. “There are multiple pros and cons to each option. Ultimately, buyers will simply need to decide what option better suits their needs,” he explains.
To help buyers weigh up their options, RE/MAX of Southern Africa lays out the pros and cons for each scenario:
Pre-built homes can be found in more established suburbs
Most of the time, already established homes are located in great areas near to schools, hospitals, and other convenient places. Vacant plots are rare when it comes to proximity to inner-city areas. This means that building a new home might not be as close to schools or hospitals and might be situated in a newly developing area.
But, given that most empty plots are found in developing neighbourhoods, it is possible to see greater house price appreciation on a newly built home as the area grows and increases in demand over time. Once a property has been finished, the value of the real estate is likely to steadily rise into a handsome return on investment at the point of selling or renting the property.
Upsides and downsides to built-in features
When buying a home, one might be able to afford a house with some expensive add-ons, such as a pool, lapa, or beautiful landscaping. But, when building from scratch, these features could cost a lot of money that the homeowner simply does not have. These nice-to-have features might only be added at a later stage.
On the other hand, established homes are not necessarily equipped to be energy efficient. They might have older geysers that use a lot of energy to heat up. Some older homes are not as well insulated, which could push up the costs of heating and cooling the home. Making these homes more energy efficient could end up costing a lot of money.
Buying a home saves time (and possibly money)
Buying a home usually takes around three months for the transfer and registration process to go through. On the other hand, building a new home could take well over three months and could even stretch out over years, depending on your contractor and unforeseen costs that could arise.
Buyers may also need to rent a house to live in while the home is being built and this could be an extra cost that they did not anticipate. Those who choose to build should plan on how long they might need to finance additional rent expenses and how much they can afford to spend on rent.
Building a home avoids transfer fees
Since there’s no transfer of property from one owner to another, buyers who build from scratch save on transfer duty and avoid some of the legal processes that other home buyers have to go through.
However, building a home from scratch can often cost a lot more than one might expect. Buyers will need a large portion of funds available upfront to make this a plausible option because acquiring finance for building can be complicated. Owing to the higher risks involved with building a home, the deposit required to finance the building of a home will usually be higher than the deposit required on purchasing a pre-built home.
Weighing up the costs
There are several factors that affect the selling price of a home, including things like the location of the house, the features of the house, as well as the current state of the market. That being said, according to the Q4 2021 RE/MAX Housing Report, the nationwide average price of freehold homes is R1,374,637 and the nationwide average price of sectional titles is R1,041,509.
While vacant lands could be less expensive to buy than established homes, the real cost comes with the building of the new home. According to an article published on Briefly, on average, the cost of building a conventional suburb house in the major centres in South Africa ranges between R10,000 to R15,000 per square meter. This can increase to around R25,000 for a more upmarket house with luxury finishes.
Whether you choose to buy a home or build it from scratch, it will be beneficial to speak to a real estate professional who can help you find out what types of properties you can afford within your price bracket. “Sometimes all it takes to help you decide which option suits you best is to go out and start looking at what is available. You might find a property that meets all your criteria or you might just fall in love with the potential a plot of land has to offer. My advice is never to rely on making this decision without first exploring the real life options that are available to you,” Goslett concludes.
Writer : Kayla Ferguson
