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Moving metros? It’s a power struggle

WIldebeest locking horns.resize

For high LSM families, with school-going kids, deciding to sell a Gauteng-based home to relocate to the scenic Western Cape is often an emotional decision. Jill Lloyd, area specialist for Lew Geffen Sotheby’s International Realty in Claremont and Lynfrae in Cape Town, believes that young families are drawn to the Western Cape due to perceived lifestyle benefits. “More and more people are drawn by the relaxed outdoor lifestyle, reliable municipal service delivery, and perceived safety of the Western Cape,” says Lloyd.

Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, estimates that 30% of the company’s sales in Gauteng are on behalf of home owners relocating to the Cape. Geffen says that, although most are aware of the fact that homes are more expensive in the Western Cape, the actual disparity, when comparing like-for-like homes, is almost always a shock to those South Africans moving there from Gauteng.

It’s a numbers game, after allMOving truck

These are not just perceptions of the market players active in the Cape. According to the latest FNB property barometer, the Western Cape achieved a year-on-year home price growth of 12% measured over the last ten years, almost twice the national average of 6.8%. Despite this relatively higher price, Lew Geffen Sotheby’s International Realty reports that up to 40% of the home sellers from Joburg suburbs such as Blair Athol, and 25% of sellers in areas such as Hurlingham Manor and Benmore are selling to move to the Cape. Relocation from Tshwane is lower, however, with only about 10% of sales in sought after Tshwane suburbs such as Brooklyn being for the purpose of relocation to the Western Cape.

Before relocating to another city, be it for professional or lifestyle considerations, homeowners should remember to factor in all costs. Moving across provinces or even major cities entails significant financial as well as emotional costs for the entire family. But what about the monthly expenses such as paying for your municipal services? It is simple to look at the bond/rental cost of a home in Gauteng versus a home in the Cape Town Metro Municipality or eThekwini Municipality, and make a decision based on that. But, according to Chris Yelland, investigating editor at EE Publishers, and SA’s unofficial energy expert, public misconception of pricing for electricity tariffs is rife.

Wanna (almost) break up with Eskom?

“Domestic electricity customers have no choice as to who supplies them with electricity, because all electricity distributors – Eskom and municipal – are geographic monopolies,” says Yelland. “It is therefore important that electricity pricing between distributors should be equitable, rational, and non-discriminatory.”

Yelland adds that the reality is, though, that there is a wide variance of electricity tariff rates between municipal distributors.

This prompted us at HomeTimes to do some homework for those wanting to relocate. Is the grass really greener on all aspects, starting with electricity costs?Comparative electricity costs

We have investigated the electricity tariffs, effective from 1 July 2015 to 30 June 2016, for the six major metros in South Africa. For the purpose of comparison, conventional rates were used and the assumption is made that the household would be a medium residential energy consumer – that is to say usage of between 1,001kWh and 2,000kWh per month.

A household whose electricity is supplied by Joburg City Power is paying R1.2529 per kWh. Should this family decide to sell its three-bedroom home with two living areas, ample garden and two garages and move to a Cape Town property, which is on average 25% smaller for a similar, or even higher price, the family’s tariff may increase to R1.8763 per kWh.

Considering this, the family, assuming usage of 2,000kWh per month, may experience an increase in electricity costs from R2,505.80 per month in Joburg to R3,752.60 in their new home.

Tshwane priciest in GautengView of Tshwane from Fort Klapperkop

Nobody in Joburg likes traffic, so someone who finds their dream job in Ekurhuleni or Tshwane may be tempted to move across metros. This could mean an increase in a family’s monthly electricity bill of R341 (Ekurhuleni) or R798.20 (Tshwane) when moving from an area supplied by City Power. In this case, an individual would have to consider the costs of the daily commute – time and money – versus the increase in the monthly electricity bill.

The bottom line is relocation to another province or even city is a decision based on a variety of factors. As Geffen explains, home buyers wanting to relocate to areas such as the Western Cape must do their homework thoroughly to ensure that the right trade-off, to fit each lifestyle and pocket, is achieved.

In the second part of our “Moving metros?” series, HomeTimes will explore the cost of moving from city to city.


Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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