New houses hard on the pocket

Financial Mail - Investors Monthly - - Opening Bell -

If you want to build your dream home from scratch in­stead of buy­ing an ex­ist­ing one, be pre­pared to fork out at a whop­ping 45% more. That trans­lates into an ad­di­tional R629,500 if one takes the av­er­age-priced and -sized home as a bench­mark, ac­cord­ing to latest fig­ures from Absa.

The bank’s hous­ing re­view for the third quar­ter shows that the cost dif­fer­en­tial be­tween new and ex­ist­ing homes has risen sharply over the past 12 months fol­low­ing rapidly ris­ing build­ing and land costs.

The av­er­age price of a new house rose by 16.1% in the third quar­ter year on year to R2,020,200. In con­trast, the av­er­age price of an ex­ist­ing house in­creased by only 3.5% in the third quar­ter to about R1,390,700.

Absa Home Loans hous­ing an­a­lyst Jac­ques du Toit says an ac­cel­er­a­tion in build­ing cost in­fla­tion and higher va­cant land val­ues over the past six months or so may have con­trib­uted to much higher price growth for new houses. At the same time, nom­i­nal year-on-year growth in the av­er­age price of ex­ist­ing homes has been on a slow­ing trend since the fourth quar­ter of 2014.

Du Toit says fac­tors af­fect­ing the mar­ket for new houses in­clude the prices of build­ing ma­te­rial, labour and trans­port, as well as devel­oper and con­trac­tor profit mar­gins, the cost of de­vel­op­ing land for res­i­den­tial pur­poses and prop­erty hold­ing costs.

In the mid­dle and lux­ury seg­ments of the hous­ing mar­ket, land val­ues alone have risen by 14.1% in the third quar­ter. That brought the price for the av­er­age res­i­den­tial stand to about R736,300. Du Toit notes that the cost of land as a per­cent­age of to­tal build­ing costs is typ­i­cally at 28.6% in the mid­dle and lux­ury seg­ment of the mar­ket.

“The de­mand and sup­ply of suit­able and ser­viced land for devel­op­ment, the avail­abil­ity and ac­ces­si­bil­ity of trans­port in­fras­truc­ture and the prox­im­ity to places of work, schools, shop­ping cen­tres and med­i­cal fa­cil­i­ties are all fac­tors that have over time caused sub­stan­tial up­ward pres­sure on land prices for new res­i­den­tial green­field and/or brown­field de­vel­op­ments, es­pe­cially in the ma­jor metropoli­tan ar­eas of the coun­try.” plans to help make the cen­tre of Sand­ton more bike-friendly. But six short months after the com­pany launched its elec­tronic bike hub pro­ject in Sand­ton ear­lier this year, more than 1,000 bike-share trips had been clocked up. That’s de­spite a rel­a­tively small starter fleet of only 20 bikes, pro­vided by GreenCy­cles, and two so­lar-pow­ered dock­ing sta­tions.

The bikes are sta­tioned at Growth­point-owned Sand­ton of­fice build­ings The Place at 1 Sand­ton Drive and at 138 West Street, op­po­site the Sand­ton Gau­train Sta­tion.

In­tended for short trips around cen­tral Sand­ton, a bike can be pre-booked and used for sev­eral hours be­fore it needs to be re­turned to the dock­ing sta­tion. The bikes pro­vided are free for use by any­one, and not one has gone miss­ing.

Each bike is fit­ted with an elec­tric mo­tor and a lithium-ion bat­tery that can be charged like a cell­phone.

“As a re­spon­si­ble prop­erty owner, man­ager and devel­oper Growth­point is acutely aware that as our sub­urbs and cities ex­pand, traf­fic con­ges­tion will in­ten­sify. E-bikes con­trib­ute to lower CO2 emis­sions, cleaner air, and less traf­fic con­ges­tion. They’re also con­ve­nient, free and fun,” says MD Esti­enne de Klerk.

Mean­while, ex­ec­u­tive di­rec­tor of trans­port for the City of Jo­han­nes­burg Lisa Sef­tel has con­firmed that the pro­posed cy­cle lanes from Alex No 3 Square to the cen­tre of Sand­ton are go­ing ahead, in­clud­ing sev­eral routes within cen­tral Sand­ton it­self, such as parts of Maude and West streets.

That’s de­spite the new mayor, Her­man Mashaba, re­cently an­nounc­ing that he would re­al­lo­cate R70m set aside for bi­cy­cle lanes around Jo­han­nes­burg for projects in Alexan­dra town­ship.

Picture: SEEFF

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