Author Topic: Building cost per square meter?  (Read 7195 times)

Offline Scrat

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Building cost per square meter?
« on: April 25, 2013, 11:48:55 am »
Would anyone know roughly what the average building cost per square meter is within the Johannesburg region, Randburg area? I know this would be range-bound and not an exact number.

I'm using Randburg as an example, but if anyone knows this figure for Potchefstroom, it would help even more. Some background:

A friend is buying a property in Potch, property worth about R1.2mil, approximately 120 square meters, nothing special or extra-ordinary. The problem however, is the Homeowners Insurance, which has been quoted at replacement of R2.5mil! The monthly homeowners insurance on such an amount, is approximately R1500! This from the bond issuer, so unless it can be proven that homeowners insurance has been taken out to cover this amount, the bond will not be granted. Something doesn't seem right?
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Offline Jaco

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Re: Building cost per square meter?
« Reply #1 on: April 25, 2013, 12:02:01 pm »
I think all NHBRC Registered builders charge just about the same rate at around R5K to R6K per sq. m.

Contact Outsurance for Homeowner's Insurance. They are approved by most, if not all Banks and offer very competitive premiums; i.e. far below R500 pm.

Offline PearlJam

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Re: Building cost per square meter?
« Reply #2 on: April 25, 2013, 12:09:12 pm »

Offline Mars67

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Re: Building cost per square meter?
« Reply #3 on: April 25, 2013, 03:41:04 pm »
They can and do insist that insurance on the structure be taken out. They cannot however insist that it be taken trough them or their associated insurance companies. Your friend can get quotes from other insurance companies and they will then issue a certificate or confirm with the bond giver that the structure is insured. Insurance on the structure cannot be that expensive. Unless it is a thatch roof house. A market related rate is in the region of R100 for every R1m. Much more than that and he is being ripped off.

Online Rodney_gold

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Re: Building cost per square meter?
« Reply #4 on: April 25, 2013, 03:45:46 pm »
Insurance should be a little above the valuation to play safe ..they won't give a bond without a valuation from one of their own valuers , so why should the insurance be double that.. unless the valuation is 2 bar or more...
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Offline Scrat

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Re: Building cost per square meter?
« Reply #5 on: April 25, 2013, 05:50:00 pm »
Yeah very strange, I suspect some error, the valuation is R1.3mil approx, why the heeeeeeeck would they deem replacement value to be R2.5mil??

Thanks to all for advice and contribution!
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Offline cj

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Re: Building cost per square meter?
« Reply #6 on: April 25, 2013, 06:24:25 pm »
 A home valuation for resale value will almost always be lower than the replacement value. Most people dont understand this and think because it cost 2 million to build a big house in a shitty area its clearly worth over 2 million.

Offline Scrat

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Re: Building cost per square meter?
« Reply #7 on: April 25, 2013, 07:54:23 pm »
A home valuation for resale value will almost always be lower than the replacement value. Most people dont understand this and think because it cost 2 million to build a big house in a shitty area its clearly worth over 2 million.

Yeah I get that, but 120 squares at R2.5mil works out to R20k per square.... Errrrr, no ;D like I said, I suspect finger trouble. Hopefully!
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Offline Mars67

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Re: Building cost per square meter?
« Reply #8 on: April 26, 2013, 09:55:12 am »
The value that the Bond giver requires to be insured for is to cover replacement cost. At the moment it is much more expensive to build than to buy exisiting. With my house the repleacement value I had to insure it for is also almost double the actual value according to me (after alterations) and is alomst three times more than my original purchase price.

Online Rodney_gold

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Re: Building cost per square meter?
« Reply #9 on: April 26, 2013, 10:27:18 am »
Insurance actually puts you back in the position that you were before , so if you paying R1.3bar for the building , you can get an equivalent for the same or maybe a little more.
Even if the dwelling is destroyed I would LOVE to see em pay out the 2.5 bar to build exactly what you had before..they will argue you can buy another place....

The difference between 2nd hand properties and new builds is not anywhere near 100% more , a new build will cost 29.5% more than buying the equivalent home

Jacques du Toit, a senior property analyst at Absa, said that existing homes are currently 29.5% cheaper than new homes in the current market. He said that building an average home will cost in the region of R1,5 million, while the average price of an existing home with the same specifications is around the R1,1 million mark.  He attributed the gap between the building and buying cost to the significant housing price drop over the last few years, while building contractors have been unable to reduce their costs largely due to the cost of commodities such as materials and labour.


Another factor is that apart from the building , the plot itself is an appreciable part of the purchase price so the 1.3 bar house is actually LESS than 1.3 bar .....
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Offline xrapidx

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Re: Building cost per square meter?
« Reply #10 on: April 26, 2013, 10:47:40 am »
Why so expensive? My property is insured for R2,650,000 and its R300 a month...

Offline Atjan

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Re: Building cost per square meter?
« Reply #11 on: April 26, 2013, 10:50:34 am »
Joburg has just lowered just about everyone's valuations on the new valuation roll. The result is that most people that bought in the last year or 3 now owes more on their properties than what the municipality's valuation is.
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Online Rodney_gold

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Re: Building cost per square meter?
« Reply #12 on: April 26, 2013, 11:00:39 am »
I'm surprised they lowered valuations as rates are paid according to that , so they get less money.. must be a first in SA that any govt dept/municipality actually SAVES  you money.....normally they eagerly sucking at the hind teat..
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Offline Atjan

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Re: Building cost per square meter?
« Reply #13 on: April 26, 2013, 11:24:16 am »
For a change I think they're thinking long term. They will naturally have to increase the rates now to make at least 6-8% more than last year. Once the property market recovers, they will be in the pound seats. We're caught in a double whammy - no service delivery and high charges. The people that set tires alight in the streets can at least not moan about high charges.
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