Is it Cheaper to Buy or Build a House?
Omolabake Fasogbon
Owning a house is everyman’s dream. This dream is achievable either by buying or building one, factoring in numerous indices. These include financing options, time and commitment, customisation and market considerations, amongst others.
Property ownership is arguably one of the best dealings in the country, given its appreciable value. If not for business, owning one is a symbol of status. Many a time, individuals are stuck in between their journey to ownership – should I buy or build? In any way, both options come with their pros and cons, which also apply to financing.
For a budget- driven person, understanding the dynamics of cost and financials of housing is crucial in deciding a path.
Generally speaking, building or owning a house is considered cheaper, amid other flexibilities.
To a former President of the Nigerian Institute of Building (NIOB), Kunle Awobodu, “Building a house by direct labour might be cheaper than purchasing it outright if the environment is the same or similar and the quality outcome is assumed to be the same. In real estate, an investor is expected to make a profit.”
Managing Director of Realty Point Ltd, Debo Adejana, however presented a different position. “Looking at it critically, buying a house actually comes lot cheaper in all sense”, he submitted.
To him, one who is mindful of cost and seeking best deals in property should opt for buying. Adejana said it takes one who is adept in construction to beat extra construction costs imposed by unethical practice and principles in construction and contracting.
“This principle ensures that one who awards a contract pays lot more for what he gets. A novice in this space will thus find it difficult to prevent or mitigate this gimmick,” he said.
As per financing a purchased house, the real estate entrepreneur held that it is much more economical and easy than constructing for oneself which financing comes tougher in this clime.
“In Nigeria, people majorly construct on an incremental basis, and since there is no financing structure for this, building projects are prolonged.
“But buying, one can arrange for a mortgage or loan and keep staying in an apartment, taking away the burden of rent payment. However, when constructing and still looking for money to meet up, one keeps paying rent till a project is completed. Hence, buying is economically prudent and cost-effective.”
He hinted that innovations are spurring in the housing sector that allows for flexible purchase in that one who is not qualified for a mortgage can own a house without breaking the bank.
“There are now purchase options that allow payment by installment. More so, options are now there for buyers to specify designs on-site during construction, thus having control over designs.
“When the economy starts working the way it should and workers charge the way they should, to construct will be much more expensive. In buying, however, there is the economy of scale that one can enjoy to bring down cost since the developer is building en masse as against one that is constructing in piecemeal,” he argued.
Speaking in the vein with Adejana on incremental building, Managing Director of Refin Homes Limited, Tunde Macaulay, said this poses high risk in the present economy given inflation and constant escalation of prices of building materials.
“The cost of construction would be high unless funds are available to buy lead items like reinforcement and cement, amongst others which are subject to price fluctuations. In addition, building on your own would require qualified professionals (engineers, surveyors, architects) to manage and supervise the project which comes at a cost.
“If, however, you are buying a house from a reputable real estate/construction firm, you do not have to worry about things enunciated above. The firms can take advantage of economies of scale because they build multiple units which can lower costs. They might sell at a premium but that covers the risk an individual would have encountered building on their own”, he said.
On the hidden costs of more than 10 per cent extra that comes with buying a house such as redecorating taxes, legal ,moving and service fee, amongst others , house buying champions held that these could not be more than the accumulated gains expected when buying a house, submitting further that building comes with lot more cost that includes cost of permit and other affiliated requirements.
