The current South African housing delivery model is generally seen as problematic and more housing categories need to be introduced to better accommodate different housing needs, UCT construction economics and management lecturer Rob McGaffin said on Thursday.
A research report compiled by McGaffin in partnership with Nedbank has found that both public and private housing delivery is failing to sufficiently address the housing backlog and cater for new household growth.
The report, ‘A way to understand housing markets beyond Subsidy, Gap and Market’, highlights that the housing delivery model has reinforced the inefficient, inequitable and unviable nature of South Africa’s cities owing to the poor location and low densities that characterise many housing developments in the country.
Further, as a result of a plethora of regulations and standards, historical inertia and the need for equity and economies of scale, the housing delivery model tends to produce relatively standardised products that fail to match the diversity of household types.
“This is particularly problematic when it comes to understanding the needs of the growing ‘gap market’, which has been lumped into a single market segment,” the report states.
McGaffin noted that conducting a comprehensive submarket analysis and avoiding oversimplified market segments such as the ‘subsidy’, ‘gap’ and ‘market’ segments, was important to identify and track the drivers of demand and better understand housing market dynamics.
“For example, the filtering of housing stock from higher-income to lower-income households over time and households climbing the ‘property ladder’ are segments that could be developed and looked at,” he said.
He noted that it was important to estimate the quantity and nature of housing units that will be demanded in the future more accurately by projecting household growth and housing choices per submarket.
“We need to identify shortages or surpluses in specific submarkets, enabling more appropriate and effective intervention.”
The report details how the market could be divided into submarkets using structural and affordability approaches based on single household attributes.
From this, the gap between supply and demand can be determined and the future demand for different types of houses better estimated.