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A new house will cost you 30% more to build than existing stock

house building siteThe average full-title home replacement cost exceeds the average existing home value by 30.4% – increasing by more than 9% over 2014/15 when it hovered around 21%.

What this means is it is increasingly difficult for the new development sector to bring competitively priced new stock to market.

This is clearly evident following the release of the number of residential square metres completed being 1,391,000 m² for the three months to November 2016; this is well down on the height of the building boom in the three months to December 2005 when 2,706,000 m² were completed.

In the shorter term, residential square metres completed declined -2.1% year-on-year for the three months to November 2016, from +0.7% year-on-year growth for the three months to October 2016.

“While the currently moderate level of building activity is not great news for the development sector, it remains crucial to maintaining a reasonable balance between demand and supply in the residential market at a time of weak demand and a weak economy,” said John Loos, FNB’s household sector strategist.


+2.92% – average growth for square metres of residential plans passed year-on-year for the three months to November

+0.6% – average growth in the number of residential units completed year-on-year for the three months to November


 

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david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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