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Building New or Buying?
House prices increased with an average of between 5% to
7% in 2010, but slowed down going into 2011. It’s ironic that with
interest rates are at their lowest levels in 35 years, high levels of
household debt, an uncertain labour market, banks’ still-high deposit
requirements and an oversupply of properties for sale are taking the
blame. Sharp increases in electricity tariffs, municipal rates and
taxes, high food and fuel prices are some of the other factors that are
negatively effecting the home buyers market.
Property economist Erwin Rode says “At current levels,
house prices are simply too high and prices are likely to continue to
contract in real terms until 2015.”
Absa senior housing analyst Jacques du Toit is
forecasting house price growth of between 1% and 1,5% for 2011. However,
du Toit was clear that price growth is becoming increasingly location
driven.
The most
interesting price differentiation is noted in the ‘new-build’ housing
market versus that of the second-hand home market. Absa’s data shows
that the average price for a new house currently averages at R1 497 800
compared to R991 700 for a second-hand home. That means that owning a
newly built house will cost you around 51%
more than owning an older house of the same size. |
