PROPERTY: Petrol Price Now a Big Factor in Property Market
Recent Gauteng Business News
Over the past five years, the petrol price has more than doubled to reach the current level of just under R9/litre, and transport costs have accordingly absorbed an increasingly large chunk of many household budgets.
So it is not surprising, says Aida CEO Young Carr, that they have also become an increasingly important element in home purchasing decisions, with the potential to seriously influence home buying patterns.
“As estate agents,” he notes, “we had become accustomed to buyers asking questions about the quality of local schools, shopping centres and other amenities. Now we are increasingly also being quizzed about the proximity of those amenities as well as the commuting distances and times to the nearest office or industrial nodes, and the availability of public transport.”
This is all to do, says Carr, with volatile international oil prices – which shot up this week, for example, in response to the political upheaval in Egypt – and the relative strength of the rand against the US dollar. “When the rand is relatively weak, South Africans pay more for petrol, diesel and paraffin, more for many other goods that are transported by road, and more in bus and taxi fares.
“In addition, the inflation rate rises and that can lead to the Reserve Bank raising interest rates and to higher household debt repayment costs. And what that means, in real estate terms, is that the consumers who are now well aware of how these changes can affect them are adjusting their home buying priorities accordingly.”
In trying to keep a lid on their direct transport costs, for example, buyers now tend to favour homes that are as close as possible to all the amenities they might use, including sports and recreation venues as well as shops, schools and tertiary education institutions. Those that have to travel to work would also prefer to do so via less congested routes, he says.
“We are seeing a rise in demand again for older homes in more established areas, and good demand for newer homes in areas where there is clearly a reasonable transport infrastructure and other amenities, but less demand for homes in brand new areas that don’t have their own schools and shops yet, or where the roads are bad and there is little or no public transport.”
The other part of the consumer response to rising transport costs and their knock-on effects, says Carr, is a growing inclination to buy only as much home as is needed. “We find that buyers are generally much more purposeful now, seeking out homes that will give them the accommodation they need for their families but no superfluous space that will just increase their bond repayment – and their risk if interest rates go up - for no real reason.
“And in due course this will no doubt bring about changes in the way homes are designed and laid out, but one interesting aspect that is already evident is that the home office is increasingly regarded as a ‘must have’ – to house either a home-based business established specifically to cut the family’s transport costs, or an executive who doesn’t want to face the traffic every day and has arranged to work at home most of the time.”
Business News Sector Tags: Property| Travel| Resources|