Opinion O
The power of property ownership
Almost, but not quite. Some slivers of silver lining may be starting to emerge, grounded in the self-same housing programme largely derided by the academic community. According to available data, the state has delivered more than three million housing opportunities to predominantly poor households. Around two million of these properties have made their way onto the Deeds Registry. This is not insignificant, relative to the six million formally titled (and potentially mortgageable) residential properties in the country. Leaving aside the awkward question of what happened to the other million or so houses delivered by the state, these properties embody significant potential wealth, if not yet actually realised, thanks to the factors noted above. That these assets have been distributed widely to beneficiaries who are largely poor is itself a frequently overlooked achievement, representing a massive transfer of wealth from the state to the urban poor.
At the same time, the transfer of housing is creating a middle class. To quote Paul Collier, a leading development economist: “Commentary on the emergence of an African middle class has become common, but it is being defined in terms of discretionary spending and potential for consumer markets. A politically more salient definition of a middle class would be in terms of home ownership and the consequent stake in economic stability.” It is this stake in economic stability, not only nationally, but locally, that provides the basis for tempered optimism about township markets.
The green shoots are visible not only in property prices, which have started to increase noticeably in some townships, but also in the emergence of a class of small-scale landlords. These landlords might build rental accommodation in their own backyards informally at first, but formal backyard accommodation is perhaps the most overlooked feature of South Africa’s housing market. According to Statistics SA, the number of households living in backyard formal dwellings increased from around 425 000 in 2011 to over 1.2 million in 2016. At the same time, the number of informal dwellings in backyards continues to increase. The same data indicates that at least 40% of them are rented.
This class of property owners, whose wealth and income are directly tied to housing, have a material interest in actively encouraging responsible government of our cities. And when they do, more investment will surely follow.
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Crime is perhaps a subset of a bigger phenomenon which deters investment, namely the complete absence of effective political leadership.
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