As fuel and transport costs continue to rise, increasing numbers of SA homebuyers are reconsidering the financial appeal of living on the outskirts of cities or in smaller towns and starting to look again at bigger centres and established suburbs closer to employment, schools, shopping and other amenities.
So says Denese Zaslansky, CEO of the FIRZT Property Group, who notes that in the past nine months, petrol prices have risen by 5,27% to almost R27 a litre, while the cost of diesel has increased by more than 11% to more than R30 a litre.
“And for households already under financial pressure, the impact extends well beyond the cost of filling the car. Fuel accounts for an estimated 35% to 55% of road freight operating costs, which means that higher fuel prices feed into the cost of transporting goods and can ultimately push up the prices that consumers must pay for a multitude of products.
“They can also contribute to broader inflationary pressure, potentially putting upward pressure on interest rates and also increasing the cost of household debt.”
As a result, she says, many buyers are beginning to realise that the cheapest house is not necessarily the cheapest place to live. “When you add up the cost of travelling to work every day, taking children to school, shopping and getting to other essential services, the apparent saving achieved by buying further out, where land and house prices are generally lower, can disappear surprisingly quickly.
“We see prospective buyers becoming increasingly aware of this and looking at the total cost of living in an area, rather than just the purchase price of the property. So higher fuel prices may soon do more than squeeze household budgets: they could start to have a major influence where South Africans choose to live.”
Transport is already the third-largest contributor to household consumption expenditure nationally, while the burden is particularly severe for lower-income households, who often spend more than 20% of their income on transport – and could spend as much as 40%.
Against this backdrop, there is already a flow of buyers back towards the established or “legacy” suburbs of major cities, as well as from smaller towns and some coastal areas towards larger economic hubs, says Zaslansky, and this is expected to increase as the cumulative effects of higher fuel prices put more pressure on household budgets.
“The shift is totally understandable, because the decision to buy a home is increasingly becoming a trade-off between housing costs and transport costs. And that could prove to be especially significant for home values in older suburbs that offer relatively easy access to major employment nodes, public transport, schools, shopping centres, healthcare and recreational facilities. It could also reinforce the long-term investment appeal of those suburbs.”
The implications of this trend could also extend beyond the major metropolitan areas, she says. Smaller towns and peripheral developments may continue to attract buyers looking for affordability and lifestyle, but rising transport costs could encourage economically active households to move closer to the larger employment centres on which they depend.
“We are not suggesting that everyone is suddenly going to start moving into city centres. But we do believe that rising transport costs will become an increasingly important factor in home buying decisions. The closer a home is to the things that matter most in a homebuyer’s daily life, the more valuable that proximity becomes when the cost of mobility rises.”
Meanwhile, the message for prospective buyers, says Zaslansky, is to always look beyond the asking price. “The right question to ask is no longer simply which home you can afford, but what will it cost to live in a particular area. Once transport, time, schools, services and other everyday expenses are factored in, a property that initially appears more expensive could actually prove to be the more affordable choice over the long term. Indeed, what you save on transport may even enable you to pay your bond off faster and make further significant savings on the overall cost of your home.”
