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When urban development fails, ultimately everyone suffers from the consequences, and, it appears, South Africans should be very concerned about how many of the checkboxes we tick from a negative perspective (stats from various sources across the web):
- Population overgrowth: 1.33% increase from July 2023 – July 2024.
- Lack of affordable housing: estimated backlog of over 2.2 million.
- Crime: Second-highest murder rate in the world: 45 per 100,000 people.
- Social unrest: 2021 riots in KZN.
- Inequality: The Top 20% hold 70% of the income; the bottom only 7%.
- Infrastructure failure: Grade D by SAICE. (A = world class; E = unfit for purpose).
- Pollution: Air pollution causes 25,800 deaths annually.
- Homelessness: 2023 stats of 18.2 million live in extreme poverty.
- Loss of green spaces due to urbanisation: Reduction of 51,8%.
Whilst we can attribute many of these statistics to rapid urbanisation leading to the growth of informal settlements around towns and cities, as those sprawl, the strain on existing infrastructure and the failure to build new infrastructure is beginning to influence property decisions.
Concerns being raised include the rise of squatter camps, lack of road maintenance, corrupt local officials, and inefficiencies in providing basic services. Other issues include the ‘dumping’ of rubbish into sewage drains and along roadsides, raising environmental and health concerns; the need to increase security to levels higher than most can afford; potholes that aren’t adequately repaired and that collapse over and over, and road surface degradation; traffic lights that are out of service for more than a year; … the list is endless.
These are disruptive influences in the property decision-making process, and what is especially concerning is the resignation by residents that nothing will change.
The overarching question Private Property poses is how these sentiments and (in)activities change the face of the SA property market, and whether there is a reality emerging that we are ignoring? Answering that question is Professor Francois Viruly, a property economist at the University of Cape Town, who has numerous research interests, including urban land economics.
Q: Change in the built environment of towns and cities is seemingly exceptionally slow, with many local governments claiming not to have funds to maintain infrastructure, let alone improve or add much-needed new roads, traffic measures, etc. What can we attribute this issue of lack of funding to?
Municipalities are facing the urgent need to address spatial inequalities, high levels of urbanisation, and housing affordability issues. At the same time, they are dealing with a tightening fiscal environment and pressures relating to a stagnant rate base.
The answer largely lies in ensuring that existing infrastructure is used as efficiently as possible, which invariably means supporting higher densities in areas where infrastructure is available. Other opportunities lie in the release of well-located land for property development, with local government playing an active role in de-risking projects.
Q: As the lack of affordable housing to meet needs continues and escalates, urban sprawl has become evident along major transport routes. Do, or did, urban planners account for this at any point, and if so, how far in advance do they plan for services outside the existing CBDs?
At the moment, housing delivery in the lower segments of the market occurs as follows: a 40 sqm house, 40 km from a place of work, with 40% of household income spent on transport. In recent years, developments have taken place at an increasing distance from CBDs and places of work. This has been influenced by land availability and a fixation on delivering houses, no matter where they are located.
To alter this trajectory, it is essential to identify well-located land and for municipalities to actively package it for development.
It is also worth highlighting that land at the extremities of cities requires a considerable amount of infrastructure expenditure. Instead, the focus should be on identifying areas that already have infrastructure, which could be utilised more efficiently through higher densities. Such areas include transport routes.
Q: When urban sprawl happens, how does it impact neighbouring residential values?
The impact of urban sprawl on housing prices varies depending on the way housing delivery is undertaken: in a planned manner or informally? Municipalities in South Africa are finding it very difficult to control urbanisation and the growth of formal and informal settlements. One would hope that, over time, informal settlements will provide the building blocks for the growth of vibrant communities with resulting increases in property values, but that means placing the focus on developing effective human settlements that can prosper.
Q: Are urban planners generally called upon to ‘retro-react’ – e.g., having to scramble to design the delivery of services (be that power, water, transport routes/roads), and if not, who is responsible?
The issue is this: The normal development process starts with town planning, followed by service delivery, building and occupation. When that fails, the delivery occurs in reverse, starting with occupation and finishing with town planning. One way or the other, the property sector delivers. Trying to retrofit an existing township is much more costly and complicated than doing it up front.
Q: To the best of your knowledge, are SA’s urban planners designing for the future growth of our cities and revising their anticipated residential demographics accordingly, or are they merely sticking to outdated development plans?
The point is that we need to start recognising that what we call the informal and affordable housing market is not a sub-market, but the South African property market. Data suggests that close to half of all the properties on the SA title deeds registry are valued at below R 750 000, which is some 70% below the R1.2-million mark.
At the moment, our planning and related policies largely respond to the top 30% of the market and the existing urban environment that serves these markets. Altering spatial inequality in this country would require ensuring that policies start responding to the urban needs of most South African households, including micro-developers and other stakeholders that serve these markets.
Q: The future and a solution?
We should be recognising that the micro-developers that operate in our townships are a growing force, probably developing more than the formal sector. Town planning interventions should consider the realities that these developers face. Often, town planning interventions and policies are stacked against micro-developers and, therefore, the affordable market: the South African property market.
There are some positive interventions, however. The City of Cape Town has introduced a programme targeted at small-scale developers. This includes supporting the submission of plan approvals, the development of pre-approved architectural plans and assisting with developers’ contributions. These types of interventions play a crucial role in helping small-scale developers undertake compliant developments, thereby supporting the property market in South Africa.
Comment by Theo Mseka, Private Property CEO:
“At Private Property, we recognise that the future of South Africa’s property market is intrinsically tied to the informal and affordable housing segment. As the article rightly points out, this is not a sub-market, but it is the market for the majority of South Africans.
Private Property is committed to ensuring that this crucial sector is represented meaningfully on our platform. From increasing affordable housing listings to driving targeted traffic and engagement, we’re working hard to ensure our platform serves all South Africans, regardless of income level. This includes building strong partnerships with developers, banks, and startups that service this market to expand our footprint in underserved areas.
We are also exploring innovative tools and services to help consumers in the affordable housing segment to make better, more informed decisions, whether they are renting, buying, or investing. We believe technology can be a powerful enabler in closing the gap between supply and demand in this space.
Our mission at Private Property is clear: to be a platform that empowers every South African to find a home or their space, and that starts with meeting the real needs of the majority”.
