Check building costs to get value for money
- 31 Aug 2010
Everyone knows that newly-built homes generally cost more, meter for meter, than pre-owned properties, but many people still dream of building a new home from scratch and they need to be sure that they are getting the best possible value for money.
“Clearly there are many factors to be taken into account when arriving at a realistic market price for any property,” says Realty 1 International Property Group CEO Hano Jacobs, “including location, design, building quality and craftsmanship.
“However, all those factors being equal, a solid starting point for assessing the relative value of a new home is building costs, and in this respect some useful information about costs in Gauteng during the second quarter of this year has been compiled by quantity surveyors Hill Du Bois (see www.hilldubois.co.za).’
These figures show that at the top end of the scale, the base building cost (excluding external works, professional fees and finance charges) for a luxury cluster home now ranges between R7100 and R8600/sqm. External works and services will add about R1050 to R1300/sqm meter to this cost.
The firm also says units defined as GASH (good address, small home) housing, should cost between R3900 and R5000/sqm to build, and puts the building costs for duplex houses and apartments at between R5000 and R5900/ sqm.
“Although such figures cannot be viewed as absolutes, they are interesting in the sense that they provide an insight into what buyers can expect to pay for different types of home,” says Jacobs.
He also says that for those determined to buy a newly-built home rather than a pre-owned one, now is probably the best time to do so – “provided they are sure that their developer or builder is not loading the price of units to try to recoup holding costs incurred during the recent recession.
“They should bear in mind that although there have been huge building input cost increases over the past 10 years, with the PPI for building materials reaching 18,4% year-on-year in November 2008, materials cost inflation has actually been declining since the start of 2010.
“This has brought the replacement cost gap (the difference between the average price of an existing home and the cost of replacing it) to around 20% - meaning that a newly-built home should only cost around one-fifth more now than a comparable pre-owned property, which is a great improvement on the situation during the last boom, when the replacement cost gap was more than 30% in many areas.”
Realty 1 International Property Group