Where do lower-income families find a home, if the entry and affordable residential markets are seeing significantly less new delivery and transactions compared to the high-end price range?
The question comes, following findings from the Centre for Affordable Housing Finance in Africa (CAHF)’s Citymark National Housing Market Report – 2024.
The report is based on data from title deeds registered on the Deeds Registry as of December 31, 2023. It analyses South Africa’s residential property market with a particular focus on affordable housing and houses delivered through South Africa’s national subsidised housing programme.
According to the report, the lack of affordable housing in the market is especially true for the entry market where, “apart from government-subsidised housing programmes, there is limited delivery of properties financed by the private sector.
“Resale transactions in the affordable segment have (also) been on a decline since 2012 and new transactions have been declining since 2015”.
“Overall, the number of properties within these two market segments has been falling for the last nine years due to reduced delivery and some of the properties filtering onto the conventional market. This poses a serious challenge to many South African households whose incomes only allow them to purchase entry or affordable properties. Although the mortgage market has seen considerable growth with a 33% increase since 2020, the lower market segments have received limited growth. The entry market saw a 21% increase and a 12% increase was observed in the affordable segment since 2020 in terms of bonded transactions. Of all the bonded transactions in 2021, only 10% were in the two lowest market segments and less than 1% were for properties valued under R300000.”
The report further finds that except for the Western Cape and Gauteng, all the provinces have their largest share of residential properties in the entry-level market segment, under R300000. In the Free State, 59% of the residential properties are in the entry market. However, the residential property markets of the Western Cape and Gauteng have a different composition. In Gauteng, a small portion of the properties are valued less than R300000 (16%), but 63% are under R900 000.
For the Western Cape, only 47% are below R900000.
“The number of bonded transactions has varied over the last few years, largely due to Covid and its impact on interest rates. The total number of bonded transactions in 2023 was only 110498, a steep 25.5% drop in mortgage lending compared to 2022 volumes. “As a result, there were 37 834 fewer bonded transactions in 2023 compared to the previous year.”
The findings also show that in terms of the volume of properties, Johannesburg had the largest residential property market across the eight metros – with a total number of 846 797 residential properties in 2023, compared to Buffalo City with the lowest at 125 421. In terms of value, Cape Town has the largest residential property market, at R1.402 trillion, followed by Johannesburg with R1.104 trillion.
On the status of affordable housing in the country, the Housing Assembly’s Kenneth Matlawe said there were not enough affordable housing projects because in the whole budget, social housing gets a very small percentage of that which translates into a small number of projects.
“Social housing, because it’s partly government and partly corporate, they also become very expensive very quickly... they start off with affordable rentals, then 10% increase becomes 30% every year (and) in five years people are not able to afford it anymore.
“People who qualify in less than 10 years are unable to keep up with the rent.
“When they want to buy a bonded property there’s an issue with financing.”
Cape Times