Just how relevant is the Township Residential Property Markets (TRPM) survey — released last week amid fanfare — to the mass of poor township residents?
The survey, funded by the Treasury, the Micro Finance Regulatory Council, USAid and the FinMark Trust, among others, found the secondary property market in townships was “dysfunctional”, with only 8% of houses subject to a secondary transaction over five years and only 26% of surveyed householders willing to sell.
It also found there was no “housing ladder”, where residents sell to improve their housing conditions, and little use of housing to raise money for income-generation.
It valued the housing assets of South Africa’s 2,28-million township households at R68,3-billion. Mobilised, this “dead capital” presents “a huge opportunity to fundamentally impact on broad-based economic empowerment”.
The report urges focused interventions to improve secondary markets, including the removal of procedural and legal impediments to formal title, access to credit — like the “risk-sharing” mechanisms under debate in the financial sector — and extending state subsidies to secondary transactions.
A key recommendation is the repeal of the eight-year prohibition on the sale of subsidy houses under the Housing Act. The report also calls on the state to improve the urban environment and promote the concept of formal title through information campaigns.
It segments the market into informal settlements, subsidy housing, “old township” and private developments. The question is whether removing “legal, institutional and procedural constraints”, better information and more estate agents and conveyancers would make much difference to poor householders in the first three categories. Is their reluctance to sell not a rational response to circumstances?
With no other significant resources, why risk the roof over one’s head by borrowing against it? Doesn’t the mortgage instrument — vital to a secondary market and movement up the housing ladder — presuppose a steady job and predictable income stream? And how does one square individual title with the collective family ownership of many township properties?
TRPM spokesperson Kecia Rust conceded the project wrestled with the idea of a “big-bang impact”. However, the view was in a democratic society the opportunities available to the rich should also be available to the poor.
“Maybe you won’t mobilise all R70-billion, but some township residents would benefit,” Rust said.
There were “clear income issues” behind the fact that most movement was downwards or sideways, between subsidy housing and informal settlements, rather than upwards into the privately developed sub-market. But the eight-year ban on the sale of subsidy houses was a contributory factor, as they did not appreciate in value.
Prohibiting premature sales at well below the cost of construction “attacked the symptoms, not the problem”, Rust argued.
Public investment could play an important role in improving values “by targeting these areas as good addresses”. This would include encouraging and integrating industrial and commercial development and creating public spaces, such as parks.
On the problems posed by “collective” ownership, Rust agreed disputes over whose name should go on the title deed were among the reasons 53% of houses had not been transferred.
However, this was not an argument against a “facilitative” system for those who wanted and could use it. In addition, “collective” ownership could well become individual ownership in a generation or two.
Rust said there was a need for greater creativity in “how to position township housing within an asset- creation framework”.
Mortgages had been the standard tool worldwide. However, it had been suggested loans could be given on the basis of projected income from the house — either rental or business income — rather than the house itself.