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New affordable housing developments key to growth of South Africa's housing market.

More than 65% of people in SA live in rural, informal and township housing, and this trend has not changed materially in the past 25 years of our democracy. This translates to two out of every three citizens in the country spending their lives interacting and being connected to life in the townships of SA.


This is an important observation to consider because it effectively means that townships provide the economy with the largest opportunity for infrastructure development and a countrywide housing construction programme.


SA has more than 50 formally recognised townships, ranging from population sizes of 1.2 million to smaller townships of about 37,000. Soweto is the largest and most popular township in the country with more than 1.27 million residents.


Its popularity and significance to our country’s history makes it an important township to lead the modernisation and transformation of SA’s housing development programmes. 


It is widely understood that the future growth of SA’s housing market can only come from new residential developments and not the secondary sales of houses in traditionally more established parts of the cities. 


Further to this, new residential development programmes form the foundation for economic development and new urban communities, given that they attract new schools, retail facilities, petrol stations and other amenities, to support the residents of the new development.


Buying in a new development is a great way for residents from townships to start their home ownership journey for the following reasons:


  • Buying in new developments is low risk, as it affords the purchaser the peace of mind of knowing that every fixture, fitting and structure of the home is brand new, with their full warranties in place;
  •  It is more cost-effective to acquire the property, given the cost-inclusive nature of new residential developments (inclusive transfer and registration costs);
  •  The valuation and future real price growth in new developments are more predictable, due to the network of amenities and comparable sales that can be anticipated before the purchaser buys in the development; and
  •  Banks such as Nedbank have launched home loan products aimed at making it more accessible for first-time home buyers to purchase property. They specifically offer affordable housing to buyers with rate concessions of up to 50 basis points (bps) and 105% loan-to-value for purchases of between R700,000 and R1.8 million.


To date, affordable housing developments have been on the far outskirts of cities and away from economic nodes and communities. This model falls short of closing the economic and value gap required to see these properties appreciate in value, relative to other developments in the heart of more developed areas.


Property developers such as Urban Dev have set their sights on changing this narrative by producing affordable housing products that are more reflective of lifestyle developments found in traditionally established cities.


For residents in townships, it’s important for them to be able to purchase property in their community that offers the same lifestyle amenities such as proximity to malls, hospitals, highways and places of leisure.


Investing in property should provide the potential of yielding two types of value, namely an integrated quality living experience for the homeowner and future growth and appreciation in the value of the asset.


The combination of these two factors makes property saleable and provides a source of wealth creation for the owners. Therefore, it is important that property developers ensure that these benefits can be realised by residents purchasing property in the townships.   


From a macro-economic perspective, housing is a national imperative in SA’s transformation and social development agenda. As a developing nation with a young population, it is important for new developments to bring with them the residual value of not only providing townships with quality housing but create employment and small business opportunities for the community in the form of artisans and other services.