Despite rapid developments in the cities, housing solutions have overwhelmingly been provided at the lowest and uppermost ends of the market – leaving the millions of households in the middle without an entry point into the urban property market, according to a new report by property development group, Blok.
“An unfavourable situation exists in the South African housing sector, whereby the government is required to cater to the needs of people falling in the lower end of the income bracket (<R3,500) and the private sector traditionally caters to the needs of those at the high end of the income bracket (> R30,000),” said Rashiq Fataar, Director of Future Cape Town, speaking to Blok.
“No one caters to those in-between (early career persons, key or essential services workers), which traps many families in long-term renting or long commutes, and denies them the security of home ownership in favourable or well-located areas.”
He noted that the limited supply of both land and houses, and a relatively non-competitive housing market where sellers dictate the cost of land, along with relatively non-competitive building costs, has also exerted significant upward pressure on rental, housing and land prices.
These concerns were echoed by town planner and land economist, Rob McGaffin.
“The housing sector is not delivering adequate stock at the rate and scale needed, nor is it serving the diversity of the market given varying levels of affordability and access to credit,” he said.
The middle-income market – which have a total household income of R15,000 to R45,000 – therefore face tremendous pressure (financial and otherwise) in trying to access housing opportunities, particularly in well-located areas of the city.”
“This group also falls outside of the gap and social housing market (R3,500 to R15,000), and therefore cannot access government subsidies or support.”
It’s going to get worse before it gets better
Citing the UN’s report on the urbanisation of cities around the world, Blok notes that in 2016, an estimated 54.5% of the world’s population lived in urban settlements. This number is expected to grow to 60% by 2030, with one in every three people will live in cities with at least half a million inhabitants.
According to the UN between now and 2030, Johannesburg is also expected to be among the world’s top ten megacities – accounting for this mass growth.
Population statistics of Cape Town paint a similar picture, with the city’s population growing by 45,9% between 1996 and 2011 from 2,563,095 to 3,740,026 people. Currently, the Mother City’s population is estimated to be 3,860,589, reaching 4.46 million by 2032.
“This growth in our cities without doubt calls for developers to find and create solutions for middle-income urban housing,” said Blok.
“There is a need for local developers to cooperate more closely with government authorities and agencies at a local, regional and national level to address and shape living conditions that are feasible and long-standing and include the middle-income bracket.”