Build or Buy a house in Kenya – Which is the better deal?

Everyone dreams of owning a home and it is often a dilemma choosing between buying land to build one’s house and buying a pre-existing home. Whether you decide to buy a home, build from scratch or opt for off-plan property, there are both advantages and disadvantages that accrue.

But is it cheaper to build your own home or to buy a house? This is one very difficult question to a number of Kenyans. I believe that there is no definite answer to this question because the decision is guided by factors such as one’s financial status, cash flow, and work schedule among others.

For instance, most people consider cost is one of the major determinants in making this decision. A simple calculation will indicate that building a house is the cheaper option. Reason: the profit margin that the housing developers put on their selling price is no longer there. 

However, one might argue that due to the time value of money the cost of purchasing or building a house is likely to be the same in the long run. This is because purchasing a house is a one-off transaction and therefore you are not likely to be exposed to any inflationary pressures that might arise in the future. On the other hand, building a house takes some time and any adverse movements in the prices of the raw materials are likely to inflate the cost of the house.

Despite this argument, there are other factors that one has to consider.

Opting to build the house.

Most people also prefer building their own houses because this option offers them the chance to customise their dream home with flexibility to decide on its size, number of rooms, the interior and exterior of the house, landscaping and much more. When building a home, you also get total control over features and materials to be used. Building allows flexibility in design. You can have the house completely customized to your lifestyle, taste and the needs of your family.

One also has an upper hand on the budget, and how much money one would be happy to spend on construction materials.

However, building a home is stressful and time consuming, especially when you consider the time you spend to shop around for a suitable piece of land, discounted building materials, going around with county government by-laws and logistics, not forgetting the ever nuisance fundis.

The hassle of dealing with construction workers is trouble that most people would not want to go into. In fact, managing fundis to finish on time to show up for work is not for the faint hearted. 

One also runs the risk of a costly construction process when building one residential property – losing out on the benefit of economies of scale that a large property development may achieve.

The option of buying a house.

On the other hand, buying a ready built house can offer some obvious benefits. You can move in immediately, forgetting the often niggling issue of paying monthly rent. In this case, what you see is what you get.

As a prospective buyer, you have the opportunity to inspect a property to ensure it suits your needs and specifications. Effectively, a ready-built home also gives the buyer time to verify structural soundness of the building from the outset.

Secondly, many of these houses are being built in gated estates or apartments. These estates come with some shared amenities such as swimming pools, gym, playing courts, security, generator services among others. These amenities require frequent maintenance. Thus, the developers of the estate or an apartment charge a monthly fee for the maintenance of these amenities. The monthly charges are really exorbitant in some of the estates. 

Hence, when you decide to purchase a house, you have to also put into consideration these monthly charges and ensure that the developer has disclosed all the fees that are subsequent to the purchase of the house. 

These charges are avoidable in case you build your own house. Thus, one should always put them into consideration when making the decision on whether to buy or build a house.

However, there is little or no flexibility on design and aesthetics in a property that may be old enough to ensure additional costs for renovation and repairs. Maintenance costs such as repairs and landscaping must also be taken into consideration.

Buying an off-plan property.

Buying an off-plan property is another option which has its own unique benefits too.

An off-plan property is one that is bought on paper, often in a development of multiple units, developed with specifications dictated by a development team. Off-plan properties retail much cheaper than pre-existing properties, because buyer payment installments over the construction period are used to cover construction costs, which ultimately means the developer does not invest as much as he would if he were selling a pre-constructed property. You are likely to benefit from substantial capital appreciation on the property once it is ready.

This option also tends to be hassle-free, since you do not have to manage or supervise any part of the building process. The process can be much shorter than building your own home because the development team has know-how and expertise, therefore solutions for routine problems are quick and cost effective.

However, when you invest in an off-plan development property, you run the risk of the developer not matching the initial promises.

An off-plan development also offers limited flexibility on design and aesthetics – and where the client does have the flexibility, they often have to carry the burden of the added expense of customising your home.

The bottom line.

As with anything else, the difference in cost between building a new home and buying an existing one depends on a whole host of factors. The size and type of home you are interested in will surely play a part, along with the location you hope to end up in.

Each of these strategies has its own advantages and challenges. This means that one has to weigh the pros and cons of each option. This means that one has to make sure they have all of the relevant information and research each option before making an informed decision.

With so many factors at play, it is therefore impossible for anyone to know with certainty. Building a cheaper starter home might be less expensive for one person, while buying an existing home and then adding custom upgrades could cause another person’s housing budget to explode.

In either case, working with a qualified and experienced professional – whether that's a real estate agent or a general contractor – can help ensure the process goes as smoothly as possible and you make the right decision for you.

At the end of the day, it pays to err on the side of caution and run all the numbers on your own. Whether building or buying, the best decision you can make is an informed one.