|
Lightstone maps South Africa's most affordable housing
Demand for
affordable housing in South Africa far outweighs
affordable housing stock, particularly for
properties with values below R200 000, where
potential demand is in the millions. So says
Lightstone property consulting, which recently
undertook a survey to identify affordable areas in
the country.
The chart
below highlights the great demand for housing in
affordable areas and particularly affordable
properties with values below R200 000. It summarises
the households that make up the population of South
Africa by their respective income earning categories
and maps these income categories to the value bands
of property that would be affordable.
Housing Demand for Residential Properties in South
Africa
Not surprisingly the biggest shortage of properties is for the
seven million households earning a combined income
of under R3 000 per month, who would not qualify for
a home loan to buy a property worth more than
R100 000. However, there are only an estimated one
million properties in the R100 000 price band in
South Africa.
These households would most likely be housed in
informal housing or as secondary households on
formal properties or in government housing so says
property consultant, Hayley Ivins.
She adds
that while income below R3 000 is the space in which
most government-driven housing activities take
place, the affordable housing market has emerged as
an important battleground for mortgage lenders in
recent years ? comprising 3.47 million properties
collectively valued at ~R850 billion. This figure is
made up of 2.28 million properties in the <R250 000
segment and 1.19 million properties in the R250 0000
to R450 0000 segment.
Lightstone
conducted an analytical exercise to identify
affordable areas in the country based on the average
residential property value in an enumerator area
(EA) using a threshold of R450 000 as the upper
limit of the average property value for the
affordable market.
The study
assumes that a household will qualify for a bond
with monthly repayments of no more than a third of
combined revenues at a R1 for every R100 value. For
example, a R400 000 will be available to a household
earning a combined income of R12 000.
The
approach used to identify the affordable enumerator
areas (EAs) was to classify suburbs as having an
average residential property value of less than
R250 000, R250 to R450 000, or greater than
R450 000.
About
175 000 properties without cadastres (the boundary
points of an erf) were excluded from the study as
they cannot be grouped into known areas. The study
also excluded areas classified as mid-value or
high-value using Lightstone?s demographic profiling
key, and areas where average property values exceed
R450 000.
Income Distribution of Affordable Areas
There is
also a significant shortfall of more than one
million properties for households earning between R3
000 and R6 000 per month, who would be housed as
above, but would also make up a portion of the
rental market for properties with values between
R200 000 and R500 000.
The income
distribution for the two classes of affordable
areas, i.e. under R250 000 and R250 000 to R450 000
shows an expected skew distribution in the chart
above for the number of households living in
<R250 000 affordable areas, with 96% of 3.4 million
households earning less than R6 000 per month. In
the R250 000 to R450 000 affordable areas, 98% of
1.75 million households earn less than R15 000 per
month.
It is
noticeable from the chart below that the stock
volumes over the last three years have remained
fairly constant. From 2008 approximately 80 000
affordable properties have been added to the
existing affordable stock base, with around 32 000
added in 2008, 29 000 in 2009 and just more than 20
000 from 2010 to date.
Affordable Stock by Value Brands
The volume of property in possession (PIP) transfers
over the last three years is shown for the
affordable market below. 2009 was notably a year of
high PIP volumes during tight economic times.
Gauteng had the highest volumes of PIP transfers
over 2008-2010 and although this province does have
the highest volume and transfer activity of
affordable stock, the PIP transfer rate is
significantly higher than the other provinces which
could imply that this province was the worst
affected by the tough economic period.
Volume of PIP Transfers by Province
 |
