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Johannesburg - Homebuyers who want to own a brand new abode instead of settling for a second-hand place to hang their hat can now expect to pay 30% more for that privilege, according to latest data from Absa.
Absa's latest quarterly housing review released earlier on Monday states that the price gap between newly-built and second-hand houses has surged to a six-year high.
Absa senior housing analyst Jacques du Toit said rising building costs meant the average price of a new house rose by a whopping 19% in third-quarter 2009 year-on-year, in sharp contrast to the -1% drop in the average price of an existing house over the same time.
That brought the average price of a new house to around R1.287m, compared to only R944 900 for an existing one in the third quarter. In rand terms, that means homebuyers now have to fork out about R342 000 more if they want to buy the average priced new property instead of an existing one.
The current price gap is in line with the 25% to 30% traditionally recorded by Absa in the 19902 and early part of this decade. However, in the boom years from early 2005 to early 2008 it still made financial sense to build from scratch, as the price difference between new and second-hand houses was less than 10%. In fact, in mid-2007 it would have cost about 1% less to build a new house than to buy an existing one, Absa figures show.
The fact that existing houses have again become far cheaper than newly-built ones is no doubt a key reason why residential building activity has taken such a knock in recent times. According to latest Statistics SA figures, residential building plans passed for the three months to August dropped by 49.4% (in square meter terms) year-on-year.
FNB property strategist John Loos said although it appears that building-cost inflation has slowed in recent months, this has to date not improved the price competitiveness of new houses.
Loos expects a lengthy wait before the market sees any meaningful uptick in demand for new housing, given that there are still plenty of bargains to be had in the second-hand market.
Said Loos: "Existing house prices need to catch up first with new housing costs before we will see an improvement in building activity. But the process looks set to be a slow one. Don't expect a noticeable improvement in building activity until well into 2010."
- Fin24.com