Affordable properties represent a substantial portion of the residential property market in South Africa. As at the end of 2017, of the 6.3 million formal residential properties visible on the deeds registry in South Africa almost 60% were valued at less than R600 000. Of those, 35% were considered ‘entry level’ properties valued at below R300 000.1 Most of these properties were built by the government as part of its RDP or subsidy housing programme. In spite of the very significant title deed backlog, CAHF estimates that approximately 1.8 million properties on the deeds registry (or 30% of all registered properties in South Africa) are RDP properties. Given that housing is the most significant asset on the household balance sheet for property-owning low income urban households, the affordable housing market offers significant wealth creating potential for beneficiary households. However, in this market households’ ability to realise value from their housing assets is significantly hampered by a number of challenges. These include:
- Access to clean, undisputed title deeds (largely driven by Government’s backlog of title deed transfers and the proliferation of informal sales in this market)
- The length of time to transact formally (compared to the alternative, an informal sale transaction, which is immediate)
- The cost of formal sales processes relative to the property value
- Limited access to mortgage finance
The extent to which these forces undermine the performance of South Africa’s affordable housing market provided the impetus to form the Transaction Support Centre (TSC).
1. CAHF (2018). Investment & economic empowerment opportunities in South Africa’s affordable housing sector. http://housingfinanceafrica.org/app/uploads/Rust_SA-housing-market-opportunity_14092018