Top trend: Home buyers respond to rising fuel costs
Category News
Including this month's steep hikes, petrol and diesel costs have risen by as much as 13% since January this year, and this is starting to have a noticeable impact on the housing market.
As consumers seek ways to mitigate the financial burden of ever-higher fuel expenses, they are making choices about where to live and what sort of home to buy that will, for a start, have a major influence on where most new development takes place for the foreseeable future.
Fuel price increases have multiple effects on SA households, many of which are currently having to make use of diesel generators to provide basic power during extensive loadshedding, which is also driving up the cost of food and other essentials on top of increased personal transport costs.
And since transport is the only one of these factors over which they have some measure of control, it is not surprising that consumers are actively seeking to live closer to their workplaces, schools, shops and other amenities in an attempt to reduce their commuting costs.
This is leading to increased demand for housing in urban and older, inner suburban areas which are more likely also to offer public transportation options and to a large extent, is reversing the flow of people away from cities and other commercial hubs that occurred during the Covid-19 pandemic.
That trend was boosted by the fact that the majority of people were working from home and travelling very little, but now higher fuel costs, as well as demands for employees to return to the office at least part of the time, are making the outer suburbs or rural areas less appealing to many potential homebuyers, despite the fact that properties in these areas are usually more affordable.
To compensate, buyers are seeking out smaller, less expensive homes in the urban areas, and are also favouring those areas where they may not need a private vehicle because they have access to public transportation or are able to walk to work.
Consequently, the values of homes located close to public transportation routes and hubs, such as Gautrain or MyCiti stations, are likely to increase more rapidly than those requiring long commutes. Higher demand will in fact lead to lower housing availability and rising prices in most urban areas, which are thus likely to offer better prospects to developers as well as buy-to-let investors.
Indeed, high fuel costs are a significant driver of increased rental demand among individuals reluctant to commit to home ownership at this time because of their concerns about how those costs will affect the overall cost of living, and their household budgets.
However, those who are full-time remote workers now - and there is a significant number of them - will no doubt continue to seek out better value for money, and enjoy lower municipal rates, in less developed country or coastal locations, and prevent a surplus of inventory from developing in these areas.
Meanwhile, builders and developers need to take note that rising fuel costs added to the above-inflation annual hikes in municipal utility tariffs are prompting homebuyers in all areas to prioritise "green" homes with features such as solar geysers and power systems, energy-efficient appliances and good insulation.
Author: Chas Everitt