Press • Aug 27, 2018
Looking to invest in a fixer-upper or a new build? Find out the construction costs per square metre in each of South Africa's provinces.
The North West has the cheapest construction costs in South Africa currently, while KwaZulu Natal is the most expensive, according to a release by Stats SA.
Stats SA recorded building plans passed by larger municipalities at current prices per province for the period Jan-July 2018. According to this data, The average building costs in the North West amount to R5 060 per m2 – R4 550 less than what it costs per square meter in the costliest province for construction, namely KwaZulu-Natal at R9 610 per m2.
The second most affordable province is Limpopo, coming in at R5 270 per m2 followed by Mpumalanga at R5 690 per m2. Sitting at the opposite end of the price scale and at the second most expensive construction province is Gauteng at R7 870 per m2 followed by the Western Cape at R7 020 per m2.
“While it is unsurprising to discover which provinces are the most affordable, it is interesting to discover that KwaZulu-Natal is more expensive than the bustling metropoles of Gauteng and the Western Cape where one has come to expect to pay a premium on most living expenses,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
Grant Gavin, Broker/Owner of RE/MAX Panache operating in Durban North and La Lucia advises local homeowners who are considering moving to a home with additional rooms or space to look for opportunities to build onto an existing structure rather than to build a new home from scratch.
The factors that affect construction costs
To understand the difference in prices per province, you should know that there are several factors that affect construction costs. The first of which is the cost of the actual building materials; items such as bricks, cement, timbre and so on. If a province is low on suppliers for these materials which lowers the chances for competitive prices, or if a province has to import them, then it's likely that that province will have higher building costs.
Labour costs can also have an impact on cost of construction. Interestingly though, according to Career Junction's Salary Review for the December 2017 to May 2018 period, unlike many other sectors: “salaries within the building and construction sector are not as competitive in Gauteng and fall in line with or just above the national average. Salaries in the Western Cape and KwaZulu-Natal are slightly lower, ranging between 6% and 11% below the national average.” '
Approved building plans per province
While KwaZulu-Natal proved to have the most expensive costs despite paying their construction professionals 11% below the national average, the two other major metropoles still managed to rack up more square meters of approved plans.
The province which approved the largest amount of building plans per total square meterage for this period was the Western Cape with a total of 1,413,402 m2 in approved plans. Gauteng followed at 1,111,604 m2 in approved plans, and KwaZulu-Natal placed a distant third at just 291,014 m2.
“Interestingly, Gauteng outperformed the Western Cape in terms of plans for freestanding properties, while the Western Cape outperformed Gauteng in terms of plans approved for townhouses and flats. This makes sense, as more and more Capetonians are choosing renovate their sectional titles closer to the CBD rather than relocate to freestanding homes where they would be forced to endure the commute,” Goslett concludes.
Absa has released its latest residential building statistics report – detailing how much it costs to build a home in South Africa right now.
The report found that there was a large increase in residential building activity in the first quarter of 2018, with the number of new housing units for which building plans were approved, increasing by 17.1% year-on-year (y/y).
“This growth was largely the result of trends in plans approved for houses smaller than 80m², which showed growth of 33% y/y, and plans approved for flats and townhouses, which increased by 14.7% y/y in the first quarter of the year,” Absa said.
However it found that the number of new housing units reported as being completed was lower in each of the three categories of housing in the first three months of the year – which resulted in a combined decline of 25% y/y.
This difference between the number of houses planned vs those which have completed construction is likely due to renewed confidence in the current economy.
Absa found that building material manufacturers, architects, quantity surveyors, building contractors and sub-contractors as well as hardware retailers, all reported improved business confidence in the first quarter of the year – but was still below the confidence-neutral level of 50 index points.
Cost of building
According to the report, the average building cost of new housing completed increased by 3.1% y/y to R7,360 per square meter in the first quarter of 2018, compared with R7,135 per square meter in the same quarter last year.
“In real terms, i.e. after adjustment for inflation, residential building costs were down by 1% y/y in the first quarter, based on an average headline consumer price inflation rate of 4.1% y/y over this period,” Absa said.
The average building cost per square meter in the three categories of new housing was as follows in January to March 2018:
Alterations and additions
Absa found that building activity with regard to alterations and additions to existing houses was relatively flat in the first quarter of 2018, with the building area approved rising by 0.9% y/y and the building area reported as completed contracting marginally by 0.1% y/y.
“The building cost of completed alterations and additions to existing houses increased by 13.7% to R7,026 per square meter in the first quarter from R6,182 per square meter a year ago,” it said.
“In real terms, the building cost in this segment of the property market was up by 9.2% y/y in the first quarter of the year.”
I want to renovate my HOME!
One of the first and most prevalent questions property owners ask when they start thinking of renovation projects in South Africa, is “How much will this cost?” Today we will explore the relevance of this question, take a look at how cost of renovation in South Africa is determined in general, and give a broad indication of what projects should cost.
Any project is limited by certain factors, or constraints. Although there are others, the three most important project constraints are time, cost and scope (together these are known as the triple constraint or the project management triangle). Cost is therefore an integral factor of the project and stays relevant from the earliest planning stages through to project signoff.
We contend that although cost and therefore project budget is an important consideration before any renovation project commences, it should never be the only one, neither should it become so important that other factors are disregarded or neglected. If you consider cost above anything else, you are at risk of compromising on project requirements, scope, quality or grade. We have seen many times that property owners who disregard generally accepted cost parameters and try to get away with unrealistically low project budgets, get into trouble. For example, using a so-called “placard tradesman” from the street instead of professional and reputable contractors in an effort to keep the project cost as low as possible often backfires, leaving the owner with hugely inflated cost and very little to show for it. Similarly, using sub-grade material such as B-Grade instead of A-Grade tiles, or weaker building cement because it is cheaper, often has disastrous effects.
Having said that, it is equally important for the project owner to have the project done within realistic cost parameters. This is why it is of the utmost importance to procure as many quotations as is realistically possible. A general rule of thumb is three quotations, since with this number you are likely to get a general idea of comparative costing. Under no circumstances should an owner only get one quote, especially if the scope of work of the project is something totally foreign to him or her. Getting more than one quote also allows the owner to compare other factors, such as workmanship guarantees, terms of payment, general values, etc. of the various contractors.
So how do renovation contractors in South Africa determine cost? Well, the bad ones unfortunately thumb-suck to a large degree, or copy what others do and add a huge profit mark-up. The better ones have a proper pricing structure based on years of experience and real labour and material cost, and should be able to do project costing relatively easily and quickly. This pricing structure mainly comprises cost of material, cost of labour and a percentage for profit. Theoretically, there should be a cost indication for each and every item of what contractors do, but in reality that is simply not possible because of the complexity of the nature of their work, and therefore pricing structures are ever-evolving entities and works in progress. Most contractors are however able to provide the most common cost units on demand. The pricing structure of many contractors is based on per-unit calculations, for example per-square metre, per-cubic metre or per-linear metre, which takes into consideration labour, material and profit. Often, added to that, contractors have management or Preliminary & General (P & G) fees added. Others prefer to indicate material quantities on their quotes and then indicate labour costs as a singular and separate unit.