How to encourage affordable housing in CT's CBD

© Hansueli Krapf – 123RF.com

The need for affordable housing in Cape Town’s inner city is hard to overstate. Right now, the city’s lowest income group spends roughly two hours a day and at least 15% of their monthly salary on getting to and from work. In other words, the people who can least afford it are the same ones who have to travel the furthest and pay the most to get to their workplaces.

The paper identifies the challenges presented by the lack of affordable housing in Cape Town’s city centre – and some possible solutions.

“Right now, there’s a significant backlog in the supply of units,” explains researcher and land economist Robert McGaffin. “Apartheid planning resulted in fragmented and sprawling cities, and in Cape Town this is exacerbated by the fact that land close to the city centre is particularly expensive.”

So what can be done to encourage the development of more affordable housing in the inner city? McGaffin, along with co-authors Francois Viruly, Mark William Massyn and Nicole Hopkins, argue in their 2015 paper that development costs such as land acquisition, construction costs, financing and marketing must be balanced by the need to create a product that is truly affordable to a lower- to mid-income market. According to the paper, both realistic economic factors and policy changes have a part to play in increasing the viability of affordable housing.

Greater density

Increasing the height of buildings and dividing developments into smaller units can help improve the ratio between development costs and profitability for property developers, while still keeping housing affordable.

“There is a perception that South Africans are unwilling to consider smaller living spaces; but I think the phenomenon of backyard dwellings, in which people are willing to pay for cramped accommodation because it is well located, shows that is not the case,” McGaffin says. “In places like inner-city Joburg, the private sector is renting out 15m² spaces, at a rate of 98% occupancy.”

Less onerous buildings standards

According to McGaffin, the cumulative effect of very stringent building standards has been underestimated as a stumbling block to affordable development.

“Obviously it’s very important for standards to be in place when it comes to human habitation; but a balance has to be struck between making buildings safe to live in and making them affordable. Otherwise, a few will get to live in safe spaces, while those who can’t afford it will be forced to live in dangerous buildings. If it’s just a case of red tape, then simplifying these standards could have a positive effective on the viability of affordable developments,” he says.

Use of existing building stock

Repurposing existing stock into low-cost housing would allow significant savings to be passed on to lower-income households. “We have a habit, locally, of using the most expensive type of development method, namely new builds, to try and cater for the lowest income segment of the market,” McGaffin says.

As the paper puts it, “Not only are existing buildings cheaper, but they also make up the bulk of the built stock in the city, and therefore represent the best opportunity to deliver affordable housing at scale.”

How does McGaffin see the situation changing in the future? “I’m quite positive,” he says. “I think a lot of the suggestions in the paper are things that are already starting to happen.

“Also, the good news about a slowing economy is the fact that it can put the brakes on property prices. I think in the next several years we will see a slowing of the commercial market, and this may free up some already existing stock to be repurposed into affordable housing.”

For more information about a similar project, read here.