Some observations on informal subsidised housing market in Cape Town

  • Aly Karam
Keywords: housing subsidy, informal housing, South Africa


One of the primary benefits of homeownership in an expanding market economy is that of wealth creation through the capital appreciation of the dwelling unit. In many market economies, homeowners have most of their personal wealth tied up in the house in which they live, making homeownership preferable to rental. The housing subsidy in South Africa is built on the premise of building units for the amount of the subsidy using the model of onehouse one-plot, and making the subsidy available to people in the lowest income group. While the selling of non-subsidised properties is an accepted practice in the property market, it does raise important and new questions in the case of the subsidised housing. Selling of subsidised units, in many instances, starts within months of taking possession of the unit and at a price below the replacement value. The article attempts to respond to the following questions: How prevalent are the sales of subsidised housing? How are the units sold: legally or illegally? The study was conducted in the Cape Town Metropolitan area. One important finding was that most of the transactions happening with the subsidised housing are illegal transactions. The research also shows that the benefits gained by homeownership in the low-income communities does not lend to secure tenure and does not render the same benefits as higher income groups. The findings should encourage the government to introduce more appropriate housing options and alternatives to homeownership.


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