Buying a Home? Count the Cost of Fuel
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It is estimated that almost three quarters of South Africans consider the price of petrol as a factor before making a property purchasing decision.
According to a recent poll conducted by ooba, a leading bond originator, 68 percent of respondents consider rising fuel prices when choosing a home.
Jenny Rushin, provincial sales manager at ooba says petrol prices are definitely a consideration in households that are dependent on budgets.
She says the recent 40 cents per litre (c/l) petrol increase has resulted in the highest level recorded in three years and a double digit price tag per litre.
“The increasing price of petrol is resulting in home owners choosing to live as close as possible to their places of work in order to reduce monthly expenses,” she says.
Rushin explains that though improving, South Africa’s public transport systems are still relatively limited and many consumers still rely on personal transport.
This trend has been highlighted in Gauteng by a growth in unit sales and property activity in the Centurion and Midrand areas, which are the mid-points between Johannesburg and Pretoria, she says.
“The current fuel price, coupled with the proposed tolling initiatives on the highways in and around Gauteng, will work out to be extremely expensive for motorists travelling these routes to and from work each day.”
She says that other contributing factors for potential home owners include security considerations and proximity to facilities such as schools and shopping centers, as these amenities usually increase the value of a property investment.
In a media statement issued last month, the Department of Energy said during the review period between 2 September and 29 September, the average international production prices of petrol, diesel and illuminating paraffin decreased.
The report stated that the deterioration of the Rand against the US Dollar increased the contribution to the basic fuels price on petrol, diesel and illuminating paraffin by 40.36 c/l, 41.94 c/l and 41.25 c/l respectively.
On 29 September, the Department of Energy, Minister Dipuo Peters approved that the retail margin on all grades of petrol be increased by 4.0 c/l from 81.2 c/l to 85.2 c/l.
This increase which came into effect on 5 October was necessary to accommodate wage increases of 9 percent in 2011 in terms of the three year wage settlement agreement between the Petroleum Retailers Alignment Forum and unions representing service station industry staff that was signed in September, she said.
Estate agents report that many property buyers in Cape Town are actively buying properties close to work.
These buyers are saving both fuel and time they would normally spent sitting for hours on ends to and from work daily.
Popular Cape Town CBD fringe areas with buyers include Green Point, De Waterkant, more recently Woodstock, Salt River and Observatory, parts of Oranjezicht and Vredenhoek.
Buyers look at factors such security as well as amenities such as schools and shopping centres.
Cape Town’s CBD fringe is proving to be quite a hit with buy-to-let investors cashing in big bucks.
Property prices in locations such as Observatory according to Lightstone survey have risen by 20 percent since 2006 with the average growing from R800 000 to R1 050 000.
Homeowners and investers buying properties that are closer to work areas not only save on fuel costs but achieve reasonable home values and rentals for their properties, say agents.
Courtesy of Denise Mhlanga and Property 24)
Mike Bennett
