Between high-end homebuyers and those applying for social housing exists the sizeable yet financially underserved consumers in South Africa's 'gap' housing market, also referred to as the 'affordable' market. This 'gap' population comprises people and families who earn between 7,000 and 16,000 Rand (550 and 1,250 British Pounds) per month — too high to receive social housing grants, yet too low to quality for the vast majority of formally-provided mortgage options — and makes up around 28 per cent of South Africa's housing market.
While other South African city centres have seen a rise in new and innovative affordable urban housing options, such as Johannesburg's growing stock of lower-income rental housing properties in the central business district, Cape Town's city centre and inner suburbs remain largely void of any new developments in affordable housing properties. Cape Town's formal inner-city housing market remains a market primarily for the wealthy.
The unequal nature of Cape Town's housing market can be attributed in part to the limited availability of land in the centre: with mountains and coastline preventing the expansion of the city's core, geography has placed a 'natural premium' on the land. The high prices that property can fetch in the centre offers up very few opportunities for developers to build new properties in the affordable market. Today Cape Town's centre remains a testament to historical legacy: a place where only those who can pay this premium live; everyone else must look to the periphery for housing.
Building fully-subsidised social housing properties in the middle of the city would be a bold step towards social integration, but it would do very little on its own to enable further growth in the lower-income housing market itself.
Building fully-subsidised social housing properties in the middle of the city would be a bold step towards social integration, but it would do very little on its own to enable further growth in the lower-income housing market itself. Social housing in the city centre, paid for by the government, would be subject to dramatic secondary sale price increases due to location alone. This would effectively eliminate any possibility of the owners of these properties on-selling to individuals within the same social housing income sector. This would only perpetuate the exclusion of lower-income citizens from formal urban property markets and eliminate the purposes of social housing in the first place.
Serving the affordable market
As a sign of positive change, the 'affordable' market has recently begun to receive a growing level of interest in South Africa's larger banks and investment institutions. Absa Bank has recently introduced its new 'My Home' loans for individuals or families earning below R15,498 per month (£1,216). With the national picture beginning to look a bit brighter for the sector, it is imperative to ask what these new products can do for Cape Town.
The possibilities of making affordable housing a reality in Cape Town's inner suburbs are growing. As the World Design Capital for 2014, much more focus will be given to the city's social challenges, and how creative design can be used to transform life. For housing,this could mean exploring new and affordable medium-density architectural designs in urban centres to make use of small infill sites. Financial mechanisms could also be redesigned to more efficiently service the 'affordable' market through flexible rental schemes and appropriate long-term financing options.
In conjunction with a focus on design, governments — local, provincial and national — could all be more forthcoming in incentivising 'affordable' housing properties in the centre. Doing so would not only make use of presently-empty land for more socially beneficial investments, but would show a strong official dedication to reverse the seemingly-expanding trends of sociogeographic separation.
Sites such as Culemborg, District Six, and other parts of the city presently sit empty as parastatal companies hold onto the land for the hope of a higher dividend in the future. In conjunction, the city could go a long way to reduce the amount of red tape and bureaucratic processes that hinder and discourage developers in the inner sububs. Zoning requirements and permission processes often drive up costs through delays and redesign periods and dissuade the private sector from taking part in such construction.
Making inner-city housing truly afordable could also form part of Corporate Social Investment (CSI) initiatives. One of Cape Town's very few examples of lower-income and medium-density urban housing, Springfield Terrace, sits in the inner suburb of Woodstock just beyond the Cape Castle on a direct roadlink to the CBD. The complex of four-storey apartment buildings were made possible largely through financial investment from BP-South Africa in the early 1990s. The 7.3 million Rand interest-free loan granted by BP made it possible to transform land where 60 people lived in squalor and transform it into buildings that housed around 400 people — including previous residents — in dignified surrounds. Creating ways for companies, both national and international, to invest CSI funds into affordable and social housing projects should be facilitated and encouraged both by the private sector and by government.
Improving social inclusion
Encouraging the growth of the 'affordable' sector is vital. As architect Luyanda Mpahlwa states, 'as long as Cape Town doesn't have affordable housing in the city centre, exclusion and polarisation will continue to increase.' The establishment of affordable housing in the central city will increase direct residential access to a larger population. It will also go a long way to help expand the city's existing housing options: instead of having to jump directly from low- to high-income housing, the development of affordable housing will allow residents to move up a much more gradual and economically sustainable housing ladder.
The 'affordable' housing market represents a small but critical and growing sector of South Africa's market that could very well change the face of urban housing in not just Cape Town, but the country as a whole. By creating new and functional affordable housing properties in Cape Town's inner city, the country's housing institutions will expand to include this new segment. Social inequalities will begin to reverse. And success in this market — even with just two or three properties — will go a long way to changing the mindset of many Capetonians who tend to foster a very skeptical attitude towards 'social' housing initiatives.