For first-time home buyers, the decision of whether it is better to build a new home or buy an existing one is often a daunting one.
But, it need not be, said Samuel Seeff, chairperson of the Seeff property group. Each option has its own merits and, as with everything around investing in property, the choice would depend on your personal preference and the amount of money and time that you wish to invest.
Building your own home:
- The cost of building your own home often outweighs that of investing in a second-hand home, building prices have escalated over the last few years
- There are many new developments on offer across many affordable areas where you can invest in a new home or buy off-plan, for example investing in a plot-and-plan option.These new developments offer the advantage of no transfer duty. The selling agents or developers also often have partnerships in place with bond originators or banks to assist with home loans to qualifying buyers
- It takes a significant amount of time to build your own home, especially if you are not buying in a development, that is, if you have bought a vacant plot and now intend building your dream home
- Requirements range from getting the designs and building plans done, to the necessary approvals and project management. Banks are also very particular in terms of granting a building bond, you would need to consult with them to find out what their requirements are
- There are many hidden costs associated with building, from the drawing up and approval of plans to the many service costs, electrical, plumbing and more
- The benefit, though, is that you will have a brand-new home, customised to your needs and wants, a new garden (if applicable) and, more than likely, the latest finishes.
Buying an existing home:
- You may find excellent value in an older home. The older home might also be an ideal fixer-upper and especially for creatives, the opportunity to remodel and renovate is often a big decider
- You may even be able to find a good buy in an excellent area that will mean excellent capital value growth in the years to come. Think for example of older areas in Johannesburg such as Melville, Westdene, Parkhurst and so on, where young professionals have bought older homes and remodelled these. This has led to the general gentrification trend that has turned these areas into some of the most sought-after in the city
- You will be liable for transfer duty in addition to the normal transaction costs associated with buying a property such as attorneys’ fees and bond registration costs.
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