Housing Solutions for Middle-Income Earners

The appeal of city living encompasses far more than just the allure of having a convenient base in the hub of the daily hustle and bustle. With less travelling time and more time for “living”, city dwellers can truly enjoy urban living to the full, as they have more time available to explore their city’s offerings and mingle with a cosmopolitan mix of people. They can more frequently visit local establishments and enjoy cultural and health activities, without the stress of lengthy commuting afterwards.

However, despite rapid developments in our cities, housing solutions have overwhelmingly been provided at the lowest and uppermost ends of the market – leaving the millions of households in the middle without an entry point into the urban property market.

“An unfavourable situation exists in the South African housing sector, whereby the government is required to cater to the needs of people falling in the lower end of the income bracket (<R3 500) and the private sector traditionally caters to the needs of those at the high end of the income bracket (> R30 000),” says Rashiq Fataar, Director of Future Cape Town.

No one caters to those in-between (early career persons, key or essential services workers), which traps many families in long-term renting or long commutes, and denies them the security of home ownership in favourable or well-located areas.

The limited supply of both land and houses and a relatively noncompetitive housing market where sellers dictate the cost of land, along with relatively uncompetitive building costs, has exerted significant upward pressure on rental, housing and land prices.

Rob McGaffin, a town planner and land economist, adds: “The housing sector is not delivering adequate stock at the rate and scale needed, nor is it serving the diversity of the market given varying levels of affordability and access to credit.”

The middle-income market – which have a total household income of R15 000 to R45 000 – therefore face tremendous pressure (financial and otherwise) in trying to access housing opportunities, particularly in well-located areas of the city. This group also falls outside of the gap and social housing market (R3 500 to R15 000), and therefore cannot access government subsidies or support.

As a result, middle-income groups are either forced to rent, or tend to buy property in the outer suburbs where housing is cheaper but where they are unable to access shared public assets. Moreover, they lose out on the savings from massively reduced transport and time costs.

Housing solutions for the middle-income earners needed

When looking at the global picture, a UN report notes that “in 2016, an estimated 54.5 per cent of the world’s population lived in urban settlements. By 2030, urban areas are projected to house 60 per cent of people globally and one in every three people will live in cities with at least half a million inhabitants”. It also states that between now and 2030, Johannesburg is expected to be amongst the world’s top ten megacities.

Cape Town’s population grew by 45,9% between 1996 and 2011 from 2 563 095 to 3 740 026 people. Currently, the Mother City’s population is estimated to be 3 860 589, reaching 4.46 million by 2032.

This growth in our cities without doubt calls for developers to find and create solutions for middle-income urban housing.

There is a need for local developers to cooperate more closely with government authorities and agencies at a local, regional and national level to address and shape living conditions that are feasible and long-standing and include the middle-income bracket.

Sources:

http://worldpopulationreview.com

http://www.un.org/en/development/desa/population/publications/pdf/urbanization/the_worlds_cities_in_2016_data_booklet.pdf

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