Homebuyers Find Less Is More As Operating Costs Rise
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The annual increase in what consumers pay for municipal services – which is rolled out in most municipalities this month – is larger than usual, said Berry Everitt, CEO of Chas Everitt, and is expected to reinforce a long-term trend towards smaller, greener products. and smarter homes.
“The main element of the overall increase in municipal charges is of course the huge increase in electricity tariffs this year, in accordance with an agreement between Eskom and the National Energy Regulator. This is up to 15% in many areas and will undoubtedly lead to an instant increase in demand among existing homeowners for solar geysers, heat pumps, solar (photovoltaic) panels and other energy efficient equipment. .
“In fact, installing such equipment is already one of the most popular types of home improvement, and the trend is fueled by the fact that some banks and finance companies are already offering ‘green’ loans. to finance these improvements – or to buy a new “certified green” home.
However, continued increases in municipal rates are by no means the only factor behind growing demand for smaller homes for several years, he says.
“We have heard a lot in recent months from home buyers who have moved from small apartments or townhouses to larger properties with more space, home offices and proper gardens in response to Covid lockdowns -19, but the point is, most of these buyers are still only buying the home that they and their family need.
“They don’t want to have extra bedrooms and dining areas that are unused most of the time, for example, or cavernous living spaces that are difficult to heat in the winter, and that fits the trend towards smaller homes. for at least the past 10 years. Homebuyers are increasingly aware that choosing the size of the home they really need means cutting costs across the board – and that buying a smaller home isn’t just the ‘green’ thing. to do, but can also make a desirable neighborhood much more affordable.
“A smaller house will of course mean lower energy and water costs, but it will also attract lower property taxes, even in an upscale neighborhood. It will also cost less to maintain and insure. And those savings will come on top of a lower purchase price and therefore lower monthly bond repayments. “
And despite the current low interest rates, Everitt says, affordability remains a serious concern for most buyers in South Africa, as they still work under relatively heavy debt – and worry about constantly rising taxes. and the costs of food, fuel and utilities.
“South African consumers are generally much more careful today than they were before and are very careful not to get carried away. So, as more people buy now, the average size of homes purchased is definitely decreasing, which is also reflected in the huge growth in sectional title in recent years compared to freehold purchases. The latest figures available show that sectional title units only accounted for 13% of total home purchases in 2005, but just under 30% at the end of 2020. ”
Changing lifestyles have also played a big part in moving towards smaller homes, he notes. “The number of people in an average household has gone down, for example, so buyers generally need fewer rooms. In fact, four- and five-bedroom houses now represent less than 10% of new dwellings under construction and three-bedroom houses less than 40%.
“Nowadays, many homeowners are also short on time and therefore do not want to maintain a huge garden or a house. So while many buyers are leaving town now and returning to the suburbs, they tend to favor new developments that offer more compact and modern homes over the sprawling suburban homes of the past.
“Finally, it must be said that small properties are generally also easier and cheaper to secure, and this is certainly a big concern for South African homebuyers, who are already spending a lot on ‘smart’ technologies that allow them remotely monitor alarm systems. and security cameras through their smartphones, photograph intruders, open or close garage doors and gates, and turn lights on and off to make it look like someone’s home.