Buying vs Building a House
Buying vs building
With buying vs building, it is generally true that buying is approximately 20% cheaper than building a new home!
In times of uncertainty, buying or building a home remains a safe and reliable investment. The economy is not in the best shape, but the surge of new developments makes it easier to own property.
For home buyers and property investors considering buying and investing in property, the time is now! The recent negative real property price growth makes for a buyer’s market.
Buying an Existing Home
Advantages of buying:
- Security: it is less likely that there are vacant stands in the vicinity.
- Established neighbourhoods have the necessary major arterial routes and amenities. Therefore, a central business district, public transport, schools and shopping centres are close by.
- It is easier to determine current and future property values in an established area.
- Older houses usually have larger rooms and larger stands.
- You can get expert advice on patent and latent defects in the house. A home inspector will assist you.
Disadvantages of buying:
- The area you buy in may be in decline.
- Older properties are bought with the ‘voetstoots’ clause. There is no recourse or warranty.
- Costs for repairing latent defects and building maintenance could be exorbitant.
- Design and finishes may not be to your taste.
- Renovation costs may exceed the overall value of the property.
Homebuyers also need to consider that the voetstoots clause in sale agreements means they are purchasing the property “as is”. Therefore, the onus is really on them to check carefully for any defects before signing on the dotted line.
Homes more than 10 years old are likely to be more spacious than new ones because of steeply rising building costs. In recent years developers and architects have had to design smaller homes in the interests of affordability.
Better still, get a home inspector to do so for you. And remember, the seller must provide you with the required certificates of compliance and a seller’s disclosure.
Building a new home
Advantages of building:
- When buying a home from a developer the price includes VAT. As a result transfer duty falls away.
- You have a 5-year major structural defect warranty and a 1-year roof leak warranty. All building contractors registered with the National Home Builders Registration Council (NHBRC) must comply with this regulation.
- The overall design of the house is according to your needs and taste.
- Maintenance costs are low.
Disadvantages of building:
- New developments and vacant stands are usually on the outskirts of major urban areas. Security could become an issue, as well as access to major arterial routes and amenities.
- Costs may escalate architect and engineer fees, land excavation and land preparation costs etc.
- Building projects often have time overruns.
- You have little impact on the design of other constructions in the vicinity.
- Stand sizes are usually smaller.
- Project managing the construction of the house is a time-consuming and stressful endeavour.
On the other hand, there’s nothing quite like a home that is purpose-built for your needs. But for most South Africans, the thought of building a house from scratch is more than a little overwhelming.
The good news is, with help and a lot of planning, it’s possible to build the house of your dreams.
Again, employ a home inspector to do periodic quality inspections before making progress payments to the contractor!
Investing in property
However, investors should understand that building a house is unlikely to be the cheapest option. Therefore they should consider buying a previously owned house and renovating it before building a new home. Our relatively high construction costs tend to make building significantly more expensive than buying.
Wise investors ensure good value by having a property inspection or multi-unit inspection before they commit to buying investment properties.
Inspected Once, Inspected Right!®