Procompare<\/a> estimates the average cost per square meter to build a middle-class freestanding residential house at R12,920.<\/p>\n\n\n\n“One must also consider the cost of renting a home while waiting for the new one to be built, as well as the possibility of complications and costly delays throughout the construction process, which can exceed the budget,” Smee said.<\/p>\n\n\n\n
The general rule of thumb is to factor in an additional 20% for breakages, delays, cost escalations, etc, he said. However, building a home does offer upfront savings as it eliminates the need to pay transfer duty.<\/p>\n\n\n\n
\n\n\n\nPros of Buying an Existing Home<\/strong><\/p>\n\n\n\n\n- A far quicker process from purchase to move-in date, usually around three months.<\/li>\n\n\n\n
- An existing home is more likely to be better located than vacant land, meaning proximity to schools, grocery stores or other conveniences.<\/li>\n\n\n\n
- A new home may already have luxury add-ons, such as a pool or a designer kitchen, courtesy of the previous owner.<\/li>\n<\/ul>\n\n\n\n
Cons of Buying an Existing Home<\/strong><\/p>\n\n\n\n\n- You may need to renovate or repair, especially if the home is older.<\/li>\n\n\n\n
- You\u2019ll have to pay expensive bond registration and transfer costs, including transfer duty and conveyancing attorney fees.<\/li>\n\n\n\n
- You purchase a home voetstoots, which means that any latent defects must be identified beforehand.<\/li>\n<\/ul>\n\n\n\n
Costs<\/strong><\/p>\n\n\n\nThe cost of purchasing an existing home varies based on location and property type, with additional standard costs including bond registration and transfer costs, transfer duties, a deposit, potential repairs and maintenance, and home insurance.<\/p>\n\n\n\n
“Buying a home provides the advantage of having a clearer understanding of the total cost from the start, enabling better budgeting,” Smee said.<\/p>\n\n\n\n
\n\n\n\nBest of Both Worlds<\/strong><\/p>\n\n\n\nFor those who aren\u2019t keen on the idea of purchasing a \u2018lived-in\u2019 home but who want to skip the hassle of managing their own building project, buying off-plan provides a good compromise, Smee said.<\/p>\n\n\n\n
Buying ‘off-plan’ means buying a property before it has been built and instead basing the decision off the developer\u2019s vision and architect\u2019s drawing. <\/p>\n\n\n\n
Benefits include <\/strong><\/p>\n\n\n\n\n- No transfer duty; <\/li>\n\n\n\n
- Living within a community;<\/li>\n\n\n\n
- Modern finishes and energy efficiency that comes with a new-built home.<\/li>\n<\/ul>\n\n\n\n
Costs<\/strong><\/p>\n\n\n\nWhile buying off-plan does not require transfer duty, buyers will still need to pay VAT. <\/p>\n\n\n\n
\u201cHowever, this still works out to less tax than you would pay on an existing property, because a new development property is registered at the minus-VAT value,\u201d Smee said.<\/p>\n\n\n\n
\n\n\n\nWhich option is the most cost-effective?<\/strong><\/p>\n\n\n\nUltimately, it\u2019s currently cheaper to buy, Smee said.<\/p>\n\n\n\n
Due to slow House Price Inflation (HPI), buying a home, be it off-plan or from an existing owner, is ultimately more cost-effective than building one in the current climate.<\/p>\n\n\n\n
FNB’s June Property Barometer shows a year-on-year HPI growth of only 1.9%, and data from ooba Home Loans indicates that HPI has slowed in all price brackets except the lower price band (<R1 million), which has experienced 7% growth as of May 2023.<\/p>\n\n\n\n
“We are in a prolonged buyer’s market where those with available funds can take advantage of well-priced homes. <\/p>\n\n\n\n
“However, the decision of whether to build or buy ultimately is an emotional decision based on your life stage, budget, and timeline of when you need to find new housing,\u201d Smee said.<\/p>\n\n\n\n
\n\n\n\nRead: <\/p>\n","protected":false},"excerpt":{"rendered":"
With interest rates sitting high and the cost of living rising, prospective home owners may be considering building, rather buying a home. <\/p>\n","protected":false},"author":10,"featured_media":707598,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[26],"class_list":["post-707572","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/707572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=707572"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/707572\/revisions"}],"predecessor-version":[{"id":708952,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/707572\/revisions\/708952"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/707598"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=707572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=707572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=707572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}