As South Africa’s property market faces ongoing fluctuations, potential homeowners are grappling with a critical question: is it better to build a new home or buy an existing property?
“Despite a decrease, interest rates are still high, buyer preferences are continuously evolving, and construction costs are in flux, making the decision to build or buy your new home more complex than anticipated, and deciding which option is more financially sound requires careful consideration,” says Antonie Goosen, founder and principal of Meridian Realty.
Goosen says in recent years, many of Meridian Realty’s clients have opted for the convenience of purchasing an existing property. “Buying a home that’s already built allows you to see exactly what you’re getting. There’s no need to wait through lengthy construction delays, and buyers can move in as soon as the transaction is finalised. In an unpredictable economy, the immediacy of buying an existing home is a major advantage. It also offers peace of mind, as there’s no guessing about the quality or condition of the final product,” says Goosen.
That said, there are downsides to purchasing an existing home, particularly for buyers with specific needs. “When you buy a home that’s already built, you often have to compromise on features. Whether it’s the layout, design, or modern amenities, existing homes may not perfectly align with a buyer’s vision. Renovations and updates can also add to the total cost, particularly if the property is older and requires significant maintenance or upgrades. In the current market, where energy efficiency is increasingly valued, older homes may not have the solar systems or water-saving technologies that many buyers are now prioritising,” Goosen explains.
On the other hand, says Goosen, building a new home gives buyers complete control over every aspect of the design. “If you’re someone who wants a home tailored to your exact specifications, building is the best option. From the architectural layout to the finishes, building from scratch allows for customisation that is hard to achieve with pre-owned homes. Additionally, new builds tend to be more energy-efficient and compliant with modern building codes, which can save homeowners money in the long term. New homes are typically built to meet current energy standards, which means lower utility bills and less need for future upgrades,” Goosen adds.
However, the process of building comes with its own set of challenges, particularly in the current economic climate. Building a home is often a time-consuming and complex endeavour, with potential delays caused by labour shortages, rising material costs, or contractor issues. “There’s always the risk of construction delays or unexpected cost overruns. For buyers who need a home quickly or want to avoid the stress of overseeing a build, purchasing an existing property may be the more practical route. Moreover, building can be more expensive upfront than buying, particularly when factoring in the cost of land, materials, and professional services,” Goosen warns.
One of the biggest financial considerations for potential homebuilders is the volatility of construction costs. “The price of building materials has been fluctuating, which can make budgeting for a new build tricky,” Goosen explains. While building offers long-term benefits in terms of customisation and energy efficiency, the unpredictability of construction expenses is something that prospective homeowners must weigh carefully.
As the South African property market continues to evolve, the choice between building or buying comes down to what buyers value most. “If convenience and speed are your top priorities, buying an existing home is often the smarter move,” Goosen says. “But if you’re willing to invest the time and effort, building allows you to create a home that fits your vision exactly, with the added benefit of modern efficiency.”
Ultimately, both options have their merits, and the decision should be based on individual circumstances and financial goals. “There’s no one-size-fits-all answer. It’s important to evaluate your needs, resources, and the current market conditions before deciding whether to build or buy. With careful planning and a clear understanding of the pros and cons, buyers can make the best choice for their future.”
READ: First-time homebuyers' fears - how to overcome them
In an article published on 11 May 2023, Pam Naidu, Director of Sales and Marketing at Devmco Realty, shared some key learnings which every first-time buyer should know when deciding to purchase their dream home.
1. Location, location, location! Also known as the Three L’s:
There are three micro locations that define the actual location of a property on a macro level. If the property you want to purchase is in an estate for example, you may want to find out what area of the estate it sits in and what that actual area provides, such as a good sea views, etc.
2. Financial stability is important:
Get your credit card payments and debts in order.
3. Budget:
Establish a realistic budget to determine your affordability. Create a budget and try to stick to it so that you can enjoy the process and not put yourself under too much pressure.
4. Find a trustworthy real estate agent:
This is the person that will assist in picking out your potential home and exploring your new neighborhood and is also responsible for scheduling tours and negotiating important contracts on your behalf. Ensure that this is someone you trust, to have your best interests at heart.
5. Get approved:
Get a pre-approval letter before you start shopping! This will help you have realistic expectations on what you can afford.
6. Be mindful of transfer and closing costs:
First time buyers usually tend not to factor these costs in, and it comes as a huge surprise at the end. Doing your homework is a very vital part of house hunting.
Becoming a first-time homeowner can be an overwhelming experience and requires careful consideration of several factors. With the expert advice from Devmco Realty, first-time home buyers can make an informed decision and successfully unlock the door to their dream home.
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