Ris­ing build­ing costs strengthen prices

Business Day - Home Front - - HOMEFRONT -

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.

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