Home Buyers Need to Reprioritize

Private Property South Africa

With the cost of electricity set to soar by a whopping 16 percent annually for the next five years, consumers should consider reprioritizing their list of must-haves when shopping for a home.

That’s the advice of Richard Gray, CEO of Harcourts Real Estate SA, in the wake of Eskom’s tariff increase application to the National Energy Regulator of South Africa (Nersa). If granted, says Gray, the price of electricity will massively outpace salary and wage increases, and it will have a ripple effect on food and other living costs.

In light of this, he urges home buyers to elevate the importance of energy saving features such as gas cookers, solar water heaters (which experts maintain can save between 25 and 40 percent on an electricity bill) and heat pumps, in an effort to keep their household budgets under control.

“Aside from the usual considerations such as the location and condition of a property, purchasers need to look at the energy saving features of the home they’re considering buying,” says Gray. “Properties offering solar panels, battery packs, back-up generators, energy-saving shower heads and energy-efficient appliances such as gas stoves make serious financial sense for those wanting to be able to contain their electricity costs. The ultimate grid-free solution, which could cost as much as R500 000, is beyond most budgets but every energy-saving feature and effort will make a difference.”

And if the property doesn’t come with any or enough energy saving features, he recommends allocating a budget at the time of purchase – even if it’s at the expense of new curtains or other improvements – to install features that will ensure both immediate cost savings and long term value growth.

Says Sarah Ward, Head of Energy and Climate Change for the City of Cape Town, “Whilst the majority of the country’s homes were built in an era when electricity was cheap and plentiful, that era is now past. In Cape Town alone, residential electricity consumption is responsible for an estimated 43 percent of total electricity consumption, of which mid- to high- income consumers account for 31 percent. Solar water heater systems and heat pumps are therefore great investments which can increase the resale value of new and old homes.”

Gray endorses the City of Cape Town’s promotion of electricity-saving interventions for homes, which according to Ward start at around R1 000. “An investment of about R1 000 will buy an energy efficient showerhead, a geyser blanket and / or compact fluorescent lamps (CFLs), which use six times less power than incandescent bulbs, and last much longer,” she says. ”Having the geyser hot water pipes insulated will also help to reduce water heating costs.”

“Invest-to-save options” such as good ceiling insulation, which will keep a home 5°C warmer in winter and 10°C cooler in summer, and solar water heating also guarantee long-term savings, she adds. “By doing all of these, a home owner can save 50 percent or more on electricity costs, while at the same time adding to the value of their home.”

Gray feels strongly, however, that the buck shouldn’t stop with the home owner and that Eskom also has a duty to alleviate the impact of the rising tariffs. Accordingly, he believes the City of Cape Town’s plans to introduce a new, mass roll-out programme to replace existing electric geysers with solar water heaters (SWH) should be extended nationally.

One of the driving forces of this initiative is Alderman Belinda Walker, Mayoral Committee Member for Economic, Environment and Spatial Planning for the City of Cape Town. She explains: “To date, high pressure SWHs (to replace existing conventional geysers) have been promoted through a national rebate scheme via Eskom. This has not achieved high market penetration for a number of reasons, not least of which was the high initial capital outlay required from the household. A key aspect of the City’s support will be the use of its billing system to provide a service whereby recipients can pay for their SWHs through their consolidated rates bill. There would be no upfront payment and households would typically pay less for the SWH than their associated savings on electricity for not heating water in electric geysers.”

She adds: “Savings will increase as electricity tariffs increase, making the SWH solution to heating water increasingly attractive. Once the SWH is paid off, savings will be larger still. The large scale retrofit of conventional electricity geysers with solar water heaters will result in large immediate benefits by saving households’ money, relieving the pressure on the electricity supply and decreasing environmental damage and greenhouse gas emissions. In addition, this programme has the potential to result in local economic and industrial development with creation of sustainable jobs. This is a win-win situation.”

Concludes Gray: “While consumers can’t do anything about the electricity tariff, they can make use of alternatives that will reduce their energy bills and simultaneously add value to their properties.”


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