To build or to buy is a common question often asked by most buyers when embarking on a property purchase.
Given the nature of the North Coast property market where many vacant sites are on offer, it’s not surprising that this quandary is on purchasers’ minds.
Like most debates, the answer is not simple and depends on quite a few factors, although most seem to come down to financial reasons as to which way an owner will go.
The big benefit on the build column is simply that you get what you want.
Any house you buy is never 100% perfect and building goes a long way to getting exactly what you desire. It also means you move into a new house. Yes, you can buy a new house, but will it ever be exactly how you want it?
The big downside to building is that you must wait. Realistically, if you make an offer on a piece of land today, the best case scenario is that you’ll only be moving into your new house in 15-18 months.
The other downside is the stress of building, the many contractors to deal with, the hundreds of decisions to make, and if you ask anyone who has built before, it doesn’t always go swimmingly well.
If you buy a house already built, you’ll be moving into it in 2-3 months’ time. That can still be a stressful process, but on a different level to building.
Another downside is that, assuming you are getting a bond, you will have to start paying the bond while you are more than likely renting or paying a bond in your current home, hence doubling up on that monthly expense.
But as a counter to that, if you buy land and not a ready built house you will save heavily on that transfer duty as there is no transfer duty on the build portion, which is the more expensive part.
So, what does one do? It depends. Isn’t building expensive? No doubt in the last decade the price of building has rocketed.
Builders’ costs, materials, professional fees have all headed north and its quite common to hear sellers say, “You can’t replace this house for the same price if you built it again today.”. That is true is many cases, and indeed it would be difficult to buy land and build a house for less than what is currently on the market.
The caveat here though is often at the top end. Many houses at the top end that are starting to get a little old or do not have a modern design, will cost a buyer quite a few more million rand to then change it to how they want it – and that is on top of the huge transfer fees at that level.
By the time you have done that, it may indeed be better to start from scratch and build. So yes, you can’t replace but that assumes a buyer wants exactly what the current house has to offer. Time, stress, fees, renovations, getting what you want, costs, hidden costs, all come into play when making this decision.
So ask me again: Better to buy or build? The answer is an emphatic: “It depends”.
Make sure you do your research and seek advice from a professional.
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