Been pondering the strange concept of value recently.
Let's say you own a three-bedroom house in Somerset West. You decide to rent it out. Now, you like your house, you like the area, you think it's close enough to everything important to be worth paying for. Next step? You start looking at what other people are charging in the area - and charge around the same. And it could be anything from R2,000 to R50,000 per month.
Yes, it does vary that widely.
But who actually set those prices to start with?
Let's say you bought the land and built the house yourself. Your little piece of earth (which, by the way, you don't actually own - or you'd have your own country) is a couple of metres by a couple of metres. You pay for every weed on the plot and own just enough down in the ground to lay a foundation (any more and you'd need a mining licence from the guys that ACTUALLY own your land - the government). You go out and hire an architect - who decides that his time is worth a certain amount of money per hour and charges accordingly. What did he base this on? What everyone else in his field is earning - and what car he'd like to upgrade to next year. Now you have your plans, you get in the builder - who also decides how much his effort is worth, then goes and sources the required ingredients (also priced according to figures sucked out of the air, basically), adds on his profit and charges you. Every little thing adds up - from the roof tiles at R30 each x many, to the conduit at R12.80 for a 4m length. And then inflation kicks in while you're building, and the costs go up - over what you've allocated... Again - where does inflation come from? Also basically sucked out of the air.
Right, so eventually your house is built, you move in, and you start paying rates and taxes on the ground that you actually don't own but have already paid a considerable amount for and plonked a dwelling onto. Then you pay for electricity and water, and then you discover the builder cheated on some things - which get replaced within a year. You pay for garden services to keep nature at bay, you pay for a maid to come in and clean what nature blows in once a week. You pay to cool down the inside of this square of bricks because nature is being too hot outside. Before you know it, your house is actually pretty expensive all told.
And we haven't gotten to what the banks are charging you to pay for it either...
Now you're renting it out - and trying to recover the costs of everything priced by sucking figures out of thin air. So you ask the poor sod moving in to do so on your behalf. You have to pay back what the bank wants each month, and also pay for wherever you're living/building now - so let's slap a flat fee of R5,000 per month (nice and cheap!) plus water/electricity etc on as value.
The trouble I have with this whole concept of value is this: One three-bedroom house could be exactly the same size and shape as another three-bedroom house. It could have cost the same in bricks and mortar to build. Yet one is valued at 10 times more than the other, simply because it's 2km down the road.
Truthfully, this whole value thing makes absolutely no sense if you sit down and breadcrumb it back to where the actual Rands and cents allocation begins - if you can find it. Value is really all in our heads. Unfortunately value is what squeezes the life out of us, forcing us to over-pay for our daily groceries (whose prices are going up thanks to an endless chain of people wanting more), our accommodation, our travel, you name it.
Equally unfortunately, the entire planet is stuck with this monster we've created.