Black house ownership is a democratic success

2010-11-13 15:37

The handing over of houses to black citizens in South Africa since the ­advent of democracy has been the country’s most successful reform.

Black ownership of South Africa’s primary residential market now amounts to 41.7%.

White ownership is at 43.8%, ­coloured ownership is 8.3% and ­Indian ownership is 6.2%. The total value of the primary residential ­market is R4.1 trillion and there are about 13.1 million households in the country.

These figures, reflecting a radical change in the composition of South Africa’s housing market since 1994, constitute principal findings from ­research by Economists.co.za chief economist Mike Schüssler for Sake24, a sister publication of City Press.

The objective of the research was to determine who owned what in the South African housing market.

Schüssler looked at the primary property market, embracing the whole spectrum of home ownership in South Africa. It included houses that people owned, RDP houses, ­rural properties, informal accommodation, farms, and houses in former townships where people live rent-free but where the properties were being transferred to the occupants.

Although black ownership had ­significantly increased over the past 16 years, he found that the average value of a black household’s home – R188 000 – was significantly lower than the average value for the other racial groups.

The average value of a house ­occupied by a coloured household was R385 000, an Indian household R924 000 and a white household R1.4 million. Based on these figures, Schüssler said, the average house in South Africa was worth R355 000.

Schüssler said the residential ­market was the sector of the ­economy where most real asset transfers had taken place to improve the welfare of black people.

Thirty-six times more blacks owned a house than owned shares, he said. This reflected the value attached to home ownership, especially as a home of one’s own was an ordinary South African’s biggest asset.

The success story can be ascribed partly to the new houses built by ­government and the private sector over the past 16 years.

Between 1994 and the first quarter of this year, government had built ­3.1 million houses, mainly for black households. This was considerably more than the 959 199 built by the private sector, bringing the total to four million houses.

Schüssler expected the total number of houses to rise to five million within the next four years.

The willingness of banks to award home loans to black people had played a role, he said, as had the ­hiring of black people.

Banks had focused strongly on ­encouraging black home ownership and most of the banks now gave 100% home loans to households earning R16 000 or less per month – about 80% of the population, ­according to the Affordable Land and Housing Data Centre.

Currently, about 480 000 black households, 182 000 coloured households, 95 000 Indian ­households and 409 000 white ­households have mortgages.

Schüssler said the figures were an indication that, although black households were still much poorer than white households, they had made rapid strides in the housing market.

Black households were also ­leading the country in ownership of second properties.

According to Schüssler’s research, 31.7% of blacks had a second ­property, compared with 10.3% of whites. And 260 000 black ­households were currently living partly off rental income, compared with 54 000 coloured, 7 000 Indian and 98 000 white households.

In effect, 3% of the country’s population consisted of landlords.

Total home ownership in South ­Africa, at 65%, nearly matched the US figure of 66%. Yet, although 65% of South Africans owned their dwellings, only 40.5% of the adult population was employed. South Africans, then, were wealthy in terms of assets but poor in terms of income.

The next step was to focus on job creation and economic infrastructure, said Schüssler, including the building of roads, railway lines and electricity systems.

First National Bank (FNB) ­property analyst John Loos said the biggest improvement for a household moving from an informal to a formal house was in the services ­accompanying the new home.

Electricity, in particular, gave households access to information through television and the internet, which made a difference to ­levels of education.

He said there had been a gradual influx of home buyers from ­townships into previously white ­residential areas.
According to FNB’s property barometer, the ­percentage of blacks buying houses in these areas during the third ­quarter was 32%, whites 50%, coloureds 7% and Indians 11%.

– Sake24

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