South Africans looking to buy an erf to build a new house will have to pay a small fortune to do so.
Not only did stand prices sky-rocket during this year's third quarter, but the costs of building a new house have also risen steadily.
Stand prices were 16,5% higher during this quarter than during the corresponding period last year, according Absa's quarterly property report. The average stand price is now R482,200. The average land price in the coastal areas has risen by 2,4% year-on-year (y/y) during this quarter to about R484,500.
Jacques du Toit, senior property analyst at Absa Home Loans, ascribes this increase to the scarcity of suitable available land with services. He says suitable land is becoming scarcer in metropolitan and coastal areas and this will not improve in the future. The prices of land will therefore increasingly reflect this scarcity.
The average cost to build a new house was 7,8% higher in the third quarter than during the same quarter last year. Du Toit imputes this to building costs increasing over the last two quarters. This has pushed up the average price of a new house by 19% to about R1,287,700 during the third quarter.
In contrast, the price of an existing house dipped by 1% in the third quarter of last year to R944,900.
Du Toit says that a prospective buyer will now be paying R342,800 or 26,6% more for a new house than for an existing house. "This is the largest price difference between new and existing houses since 2003's third quarter," he says.
This makes it relatively cheaper to purchase an existing house rather than a new one.
He predicts that this difference could shrink in future as existing house prices start rising again.
He says the core message coming to the fore in the housing market is that there is an improvement on a broad front. – Elma Kloppers, Sake24
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