It is still much cheaper to buy an existing house than to build a similar size new house. Second hand housing in South Africa is now on average one third cheaper than similar size new housing. However, buyers of second hand housing are advised to make their purchase subject to a home inspection to make sure that they are not buying someone else’s problems, says John Graham CEO of HouseCheck.
The price gap between new and existing houses has narrowed slightly but is still very wide. Absa’s Housing Review for the last quarter of 2012 says it was nearly 35 per cent cheaper to have bought an existing home, than to have built a similar house.
This means that:
- Existing houses provide home buyers with better value for money than new houses.
- The building industry is still suffering under extreme price pressure with a steadily rising cost of inputs and a squeeze on the prices which home builders are able to charge buyers.
Absa says that the gap between the average price of a new house and that of an existing house is driven by the following factors:
- The high cost of development land.
- The rising cost of providing services to land – roads, water, sewerage and electricity.
- The rising costs of materials and labour.
- The cost of development finance.
John Graham john@housecheck.co.za