SHOULD YOU BUY OR BUILD A NEW HOME?
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? Let's explore this very important question together …
What are the advantages of buying a home?
If you’ve decided to buy rather than build, here are some of the advantages you can look forward to enjoying:
1. Better locations in more established suburbs
Everyone knows that the first thing to look at when buying a property is the location. 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.
2. It may already have luxury add-ons
When buying a home, you 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 you a lot of money. You might only be able to afford to build a home with the basics and then add on the lapa and other nice-to-have features at a later stage.
3. Buying a home saves time
If you’re in a rush, buying an already-built home is faster. This 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.
What are the disadvantages of buying a house?
If you’re still not sure if buying is for you, there are a couple of disadvantages you should keep in mind:
1. Established homes may not be as energy-efficient
Established homes are not necessarily equipped to be energy efficient. They might have older geysers that use a lot of energy to heat up. Not a lot of currently established homes are as well insulated, which could push up the costs of heating and cooling the home. Making an already established home more energy efficient could end up costing you a lot of money.
2. You might need to renovate
If you are not very handy or hate doing renovation work, this could be a big stumbling block for you. Established homes that need a bit of TLC can usually be picked up for a pretty reasonable price. However, then you need to be prepared to do repairs and renovations to get it up to standard. This could end up costing an arm and a leg, especially if you have to get professionals involved. If you are already living in the home, the renovations could also end up being very messy and difficult to live with.
3. It could give you the “lived-in” feeling
One of the issues with already built homes might have is that someone (or several people) has lived in this home before you. They have raised their families there, made memories, and left their mark. This might be an issue for some, especially if you are looking for a home to start your own family, make your own memories, and leave your own mark. It might feel that this home has already been chosen by a family and it’s not yours.
How much does the average house cost?
If you’ve decided that buying an established home is the way to go, then the next step is to find out what it’s going to cost you. Firstly, you have to keep in mind that 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. 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
What are the advantages of building a new house?
Those who are on the fence about building a new home could consider these advantages to help you make up your mind:
1. There’s no transfer duties
Since there’s no transfer of property from one owner to another, you save on transfer duty and avoid some of the legal processes that home buyers have to go through. This means that you could save some time and money.
2. The potential for greater profits exists
Given that most empty plots are found in developing neighbourhoods, it is possible to see greater house price appreciation 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.
3. You get to design your dream home
You can build a modern home that is more energy-efficient and tech-friendly, choose every aspect of this home, down to the very last detail. Making your home a true reflection of you. Designing and building the home yourself will strengthen your feeling of ownership over it. The stories you’ll share with your friends while you’re enjoying a cold one around the braai become more real, and you’re passionate about them because you were involved in the process.
What are the disadvantages of building a new home?
While dreaming of your newly built home, designed by you, seems fantastic, there are also a couple of disadvantages to consider:
1. Building from scratch takes time
Construction takes time and there are often delays, which can happen due to a lack of planning, inclement weather, and even bureaucracy. Sometimes, several contractors might be working on one project, and they might not be collaborating smoothly. This could mean that it might be months or even years before you get to move into your new home.
2. You may have to continue renting
Renting a house to live in while your new home is being built could be an extra cost that you did not count on. This could come with its own complications too. You will have to come up with a plan on how long you will need to finance your additional rent expense, what type of rental you will require, and how much you can afford to spend on rent.
3. Building a home can be tricky to fund
Building a home from scratch can often cost a lot more than one might expect. You will need to have a large portion of funds available upfront to make this a plausible option. The plot alone will cost a pretty penny and acquiring finance for the build can be complicated. Owing to the higher risks involved with building a home, the deposit required to finance the build of a home will also usually be higher than the deposit required on purchasing a pre-built home.
What to consider before building your own house?
Once you’ve made the decision of building your new home, there are some things you will need to know:
- Make sure you choose a reliable builder that has a lot of positive references
- Make sure they are certified by the National Home Builders Registration Council (NHBRC)
- Establish where you will be living while building on the new house is underway
- Make sure you have finances to cover not only the buying of the plot but also the building of the home, as well as any other unforeseen costs that might occur
How much does it cost to build the average house?
While vacant lands could be less expensive to buy than established homes, the real cost comes with the building of the new home. 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.
How to get a loan for building a home?
Instead of a normal home loan, you will require a building loan that is used to finance the construction of a house on vacant land, or to finance renovations on an existing home. In order to qualify for a building loan, you will require the following:
- You must be at least 18 years old.
- You must have a clear credit record.
- The finance must be used to build or alter a residential property.
- You must be able to afford the monthly installment of the bond.
- The contractor must be registered with the NHBRC (National Home Builders Registration Council) for all new dwellings.
- Homeowners will need to have cash for an upfront deposit, usually 10% of the cost of the project, to cover the difference between the cost of the project and the amount granted by the bank, unless you receive a 100% bond.
Made up your mind? Speak to the property experts
Once you've made up your mind on whether you're buying or building, it’s time to contact the world's leading real estate agency, RE/MAX, to help you find that perfect plot of land or dream home.