Rising building costs strengthen prices

COST OF NEW HOME A quick look at the latest available building statistics shows how the pre-owned sector of the housing market is benefiting from rising building costs.

That’s the word from Berry Everitt, MD of the Chas Everitt International property group, who notes that according to the Absa Housing Review, the cost of having a new home built increased by 4,3% in the second quarter of this year, compared to the same period of 2011.

“This put the average nominal price of a new house at R1.535m, or some 34.4% ahead of the second quarter average of R1.007m for an existing house, and this differential in price is channelling much of the increased housing demand arising from historically low interest rates away from offplan homes at the moment, and towards a reducing supply of pre-owned properties, thereby bolstering prices in this sector.”

In addition, he says, levels of residential building activity have continued to fall off this year, which means that even those who do want to buy a newly-built home are finding it more difficult to do so.

Everitt says figures from StatsSA show that in the first half of this year, the number of building plans passed for new housing units was down by some 11.6% compared with the same period of last year to 23,095 units — most of which will take approximately 18 months to two years to be built.