Barriers to private housing development in townships in the Western Cape

Thesis (MCom)--Stellenbosch University, 2013.ENGLISH SUMMARY : Since 1994, the focus of the South African government on subsidy housing has resulted in 2.3 million housing units being built. But despite this achievement, the official housing backlog figure in 2010 was a considerable 2.1 million housing units. With government’s focus on subsidy housing, little development has occurred in the gap market (households who earn between R3 500 and R16 000 per month). The gap market is households who can, to some extent, provide for their own housing needs. However, there is a shortage of housing supply in this segment of the market, so even if households can afford to purchase a house, there is no such house available. The problem is further exacerbated in the Western Cape due to high land values. This research highlights that more affordable land, suitable for affordable housing development, is available in the townships of the Western Cape. Private development in the township and affordable market, is still, however, insignificant compared to the government subsidy market. This study therefore investigates the reasons why developers choose not to develop within the gap market in the township/affordable areas. The findings revealed that developers avoided development in the township/affordable market due to five encompassing barriers, namely: land, finance, government inefficiencies, thin profit margins and the risky township/affordable market environment.AFRIKAANSE OPSOMMING : Sedert 1994 is 2.3 miljoen staatsgesubsideerde huise in Suid-Afrika gebou. Maar nieteenstaande hierdie prestasie, was daar steeds teen 2010 ‘n behuisingstekort van 2.1 miljoen. Hierdie tekort kan grotendeels toegeskryf word aan die regering se uitsluitlike fokus op subsidiebehuising wat behuising vir die bekostigbare mark afgeskeep het. Bykans geen behuising is beskikbaar vir huishoudings wat tussen R3 500 en R16 000 per maand verdien nie en wat tot ‘n redelike mate in hulle eie behuisingsbehoeftes kan voorsien. In die Wes-Kaap word hierdie probleem deur duur grondpryse vererger. Hierdie studie benadruk egter dat goedkoper grond wel in die Wes-Kaapse “townships” beskikbaar is. Maar privaatontwikkeling vir die bekostigbare mark in “townships” is in vergelyking met die subsidiemark, eintlik niksseggend. Derhalwe ondersoek hierdie studie die redes waarom ontwikkelaars verkies om nie vir die laer inkomste mark in “townships”/bekostigbare omgewings te ontwikkel nie. Die bevindings toon dat vyf struikelblokke hiervoor verantwoordelik is, naamlik grondbeskikbaarheid, finansiering, oneffektiewe regering, lae winsmarges en die riskantheid van die “township”/bekostigbare mark