As our families and needs grow so does the need for a bigger home. The million dollar question of course is whether to build on to an existing property or look for something new. Although finances may play a large role in the choice you make, it probably isn't the only aspect that should be taken into consideration.
Some people fall in love with the homes they buy and wouldn't consider moving unless it was absolutely necessary. Those that fall into this group are more likely to build on to their existing homes. Likewise, homeowners who own property close to their children's school or their workplace will often stay put, opting to extend the property to cater for their growing needs. Another trend that is becoming more prevalent is safety. While crime levels in the various suburbs do not tend to be static, staying in a home that offers good security in a suburb with a low crime rate is often a motivating factor for those who choose to extend their current home.
Adrian Goslett, CEO of RE/MAX Southern Africa says that while costs play a role, it is not always a deciding factor as some homeowners may decide to stay in their current homes and build on, even if it costs more than buying a new home with the necessary space.
He notes that the position of the home is also often a determining factor and again homeowners may opt to build on if the home is in a prime location, particularly if there are no other suitable properties on the market at the time.
“Essentially, the answer to the question of building on or moving out will be determined by different factors for different people and for each homeowner the decision remains a personal choice. While some may have always intended to build on, others may have bought the property thinking it was perfect for them at the time and they wouldn’t have to change a thing. Still others may not have the space to build on and will therefore be forced to move to a home that can accommodate their new situation.”
He points out that both options have their pros and cons. However, there are steps that undecided homeowners can take to help them weigh up which is the best option for them.
Those who do decide to extend their current homes should do some research to determine the value of their home in its current state as well as the money needed to complete the additions to the property. “The calculations of the amount needed for the building must include all costs such as materials and labour,” says Goslett. “There is also the cost of an inspector that may be required to sign off on plans where the structure of the property is altered. As a general rule with any renovation or building project, it is a good idea to add an additional 10% to the budgeted amount for any unexpected overruns in cost. Once the total amount has been determined, homeowners will be able to compare what other properties on the market offer for that price range.”
“If they find a property within the price range that offers even more than what they are planning to do to their existing home, they may be persuaded to move even if that wasn’t their original intention. A better neighbourhood, an extra room or bigger garden could all enter into the decision-making process. Alternatively they may find nothing in their price range that they like, making the option to renovate their existing property far more appealing.”
A vital consideration when undertaking any building or renovation project is over-capitalising and pushing a home’s price far above what other similar properties in the neighbourhood would sell for. If the average home price in an area is R800 000 and a homeowner spends R200 000 on additions, they may not necessarily be able to recoup the money they spent should they one day decide to sell. Building on is not always about adding value, but rather about improving the living arrangements for the current occupants of the home.
A benefit of building on is that, to a large degree, homeowners have control over the fixtures and materials used. However, even when everything goes according to plan, living through a construction period is going to be disruptive and challenging. There is also the chance that the building contractor does not do the job correctly or is unreliable. That said, moving is also not without its own challenges and costs.
“At the end of the day, while either option may appeal more to one homeowner than another, both options could ultimately result in the homeowner having the home they have always wanted,” says Goslett.
Extending an existing home is a better option when:
· You love the location of your home and the neighbourhood
· The location features relatively low crime levels
· You have the space to build
· You can tolerate living in a construction site or moving out of the house for a while
· You want to have complete creative control
· You have a reliable building contractor
Moving is the better option when:
· You want to change your location for example, in search of better schools or a shorter distance to the office
· You can't face the disruption of construction
· The additions will cause your home to be overpriced for your area