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Housing Sector Analysis - Full Report Dec 06

Housing Sector Analysis - Full Report Dec 06

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Housing Sector Analysis
Housing Sector Analysis

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Published by: Sustainable Neighbourhoods Network on Apr 11, 2011
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Analysis of South Africa’s HousingSector Performance
Kecia RustDecember 2006
 
Kecia Rust, FinMark Trust December 2006 2
 
TABLE OF CONTENTS
ACKNOWLEDGEMENTS..........................................................................................................3
 
1
 
INTRODUCTION................................................................................................................4
 
2
 
BACKGROUND.................................................................................................................6
 
2.1
 
1994
POLICY RESPONSE
................................................................................................6
 
2.2
 
H
OUSING SECTOR PERFORMANCE SINCE
1994...............................................................8
 
2.3
 
A
NEW POLICY IN
2004:
 
B
REAKING
N
EW
G
ROUND
.......................................................10
 
3
 
HOUSING PRESSURES: DEMOGRAPHIC ANALYSIS OF DEMAND.........................12
 
3.1
 
C
URRENT HOUSING SITUATION AND CONDITIONS
..........................................................15
 
3.2
 
E
LIGIBILITY FOR SUBSIDY
............................................................................................17
 
3.3
 
E
LIGIBILITY FOR CREDIT
..............................................................................................18
 
3.4
 
D
EMAND PROJECTIONS FOR RENTAL HOUSING
.............................................................19
 
3.5
 
C
ONCLUSIONS ON DEMAND FOR HOUSING
...................................................................20
 
4
 
RESIDENTIAL OPPORTUNITIES: AN ANALYSIS OF SUPPLY..................................21
 
4.1
 
H
OUSING SUPPLY
.......................................................................................................21
 
4.1.1
 
Private sector delivery.......................................................................................................21
 
4.1.2 
 
Public sector delivery........................................................................................................23 
 
4.1.3 
 
Conclusions on the delivery of new housing.....................................................................23 
 
4.2
 
D
ELIVERY OF RENTAL HOUSING
...................................................................................24
 
4.3
 
H
OUSING AFFORDABILITY
...........................................................................................25
 
4.4
 
L
IMITED RESIDENTIAL OPPORTUNITIES
:
GAPS IN THE HOUSING LADDER
..........................30
 
5
 
CONCLUSIONS: SOUTH AFRICA’S HOUSING OUTCOME........................................33
 
5.1
 
A
HOUSING APPROACH BASED ON POOLS AND FLOWS
...................................................34
 
5.2
 
H
OUSING SUPPLY SUPPORTED BY FILTERING
...............................................................36
 
5.3
 
R
ECOMMENDATIONS
..................................................................................................37
 
5.3.1
 
Stimulating increased supply.............................................................................................38 
 
5.3.2 
 
Broadening the State’s understanding of its housing responsibility...................................40 
 
6
 
BIBLIOGRAPHY.............................................................................................................41
 
ANNEXURE 1: SEVEN STRATEGIES OF THE NATIONAL HOUSING CODE....................43
 
 
Kecia Rust, FinMark Trust December 2006 3
 
List of Tables
Table 1
 
Housing tenure in South Africa, 1999-2005 (Shisaka 2006)..................................................16
 
Table 2
 
Declining purchasing power of households at specific income thresholds (1996-2005).......17
 
Table 3
 
National demand progression for rental units (Viruly, 2004)..................................................19
 
Table 4
 
Types of rental housing: projected demand 2001-2011.........................................................19
 
Table 5
 
Rental housing sector – Growth from 1999 to 2005.............................................................25
 
Table 6
 
Comparison of township and non-township property prices (Shisaka, 2004)........................29
 
Table 7
 
Prices of affordable (40-79m²) houses – ABSA House price index, Rode Report 2004 & 2005,Building Cost Report 2006....................................................................................................29
 
Table 8
 
Housing product availability by housing sub-market type (adapted from Gardner, 2004)......31
 
Table 9
 
Municipal influence on capital cost components of residential developments.......................39
 
List of Figures
Figure 1
 
Market target by financial sector lenders.................................................................................8
 
Figure 2
 
BNG elements and objectives...............................................................................................10
 
Figure 3
 
Housing demand sub-markets in South Africa (from Gardner, 2003)....................................13
 
Figure 4
 
Affordability for housing payments (rental charges or instalments on credit)........................14
 
Figure 5
 
Mean hh income in 1999 and 2005 of renting households....................................................14
 
Figure 6
 
Spread of housing and tenure by income – South African Urban Households (Informationadapted by Gardner (2004) from Census (1996 & 2001), Shisaka (2002), Gardner (2003))15
 
Figure 7
 
Quality of housing in the FSC target market (Labour Force Survey, September 2004)........17
 
Figure 8
 
Access frontier for mortgage finance in the target market.....................................................18
 
Figure 9
 
New delivery: NHBRC enrolments 2000-2004......................................................................21
 
Figure 10
 
NHBRC enrolments <R200 000 from 2000-2005..................................................................22
 
Figure 11
 
Calculated housing need for households earning R2500 – R7500 per month (Nell et al,2005).....................................................................................................................................22
 
Figure 12
 
Subsidised houses completed or under construction (1994-June 2006).............................23
 
Figure 13
 
Delivery distribution: NHBRC enrolments <R500 000 (2000-2005).....................................23
 
Figure 14
 
Real value of recorded building plans passed by municipalities (2000 prices)....................24
 
Figure 16
 
Average house price (1994-March 2006) ABSA House Price Index...................................25
 
Figure 17
 
Average house price growth from 2002-2006(Q2) South Africa..........................................26
 
Figure 18
 
Change in property prices 2002-2006(Q2) South Africa....................................................27
 
Figure 19
 
House price growth of new and existing housing (2002-2006(Q2)).....................................27
 
Figure 20
 
Average house price growth from 2002-2006(Q2) South Africa by Province......................28
 
Figure 21
 
Average house price growth from 2002-2006(Q2) within Johannesburg............................28
 
Figure 22
 
Changing housing affordability of the FSC Target Market (Banking Association)...............29
 
Figure 23
 
A housing approach based on pools and flows...................................................................35
 
Figure 24
 
The consequence of blocked pools and flows.....................................................................35
 
Figure 25
 
Housing filtering..................................................................................................................36
 
Figure 26
 
Failure to realise housing filtering.........................................................................................37
 
Acknowledgements
This paper draws heavily on a paper drafted by the author together with David Gardner andAndreas Bertoldi for the City of Johannesburg’s Corporate Planning Unit in June, 2005. Other ideas emanate from work done by the author together with a team of consultants under thedirection of Dan Smit in the development of a Housing Strategy for the City of Johannesburgin 2006.

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