Why it makes no sense to build your own home in South Africa right now
The home-building sector has entered a serious decline in past years, resulting in buying a home being a much better option than building one says Bill Rawson, Chairman of the Rawson Property Group.
Despite strong pockets of activity, the overall picture is declining, Rawson said, citing statistics provided by Stats SA showing that levels of activity in both the planning and construction phases of private-sector housing having shrunk considerably in the first seven months of 2016.
Just over 32,000 plans passed for new homes over the past year, equating to a 8.4% year-on-year decline.
The silver-lining is that these decreases should bolster prices in the pre-owned sector of the residential market, Rawson said.
“According to Absa, the cost of stands in the middle and luxury segments of the housing market showed a year-on-year increase of 21% in the second quarter of this year, while the cost of having a new house built increased by 8.5%.”
“As a result of these and other factors, it is currently 28.6% more expensive, on average, to buy a newly-built home than to buy a similar pre-owned property.”
With less “stock” coming on to the market, Rawson believes competition will grow for homes currently available, driving prices down.
“Eventually, that will restore developers’ confidence and encourage them to start planning new projects once again, but with the economy in its current slow mode, I expect the construction recovery process to be a lengthy one,” he said.
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