SA Affordable Housing March - April 2019 // Issue: 75 | Page 16

FEATURES
Can more houses fix
Cape Town’s backlog?
Affordable housing is seen as one of the world’s predominant
concerns at the moment, with every government grappling with the
problem in some way; Cape Town’s situation is no different.
By Warren Robertson
More houses can’t fix Cape Town’s housing crisis alone.
T
he affordable housing sector backlog can be addressed
as long as it is approached carefully and in the correct
way, especially by government and financial
institutions, says Kecia Rust, executive director and
founder of the Centre for Affordable Housing Finance in
Africa (CAHF).
Increasingly world governments are applying policies
based on the belief that to provide genuinely affordable
homes, the solution is to keep on building new houses. In a
way they are right, but many economists say there is still a
lot that needs to be done in addition to this.
In Europe and America, new financing options are met
with new technologies to build homes that are more
affordable, which in turn are met with rent controls and
ceilings on developer house prices or other social
interventions; but none of this seems to make a genuine
impact on the supply of homes.
The international situation is clearly reflected in Cape
Town where conventional wisdom holds that the lack of
affordable housing in the city centre is simply a matter of
supply and demand – houses are expensive and people are
homeless, because there is more demand than there is a
supply of homes for them. We’re not building enough
houses, so house prices have rocketed and this in turn has
taken home ownership out of reach for growing numbers of
young or disadvantaged people in the city.
According to the Mail & Guardian, ‘Activists have been
pressuring the City of Cape Town to begin developing
affordable housing urgently to facilitate community
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MARCH - APRIL 2019
integration and to alleviate evictions and homelessness in
the city.’ Their hope is that by increasing the number of
available homes demand will decrease, and as an extension
house prices in the area will decrease too.
However, this is not so says Josh Ryan-Collins, author of
Why Can’t You Afford A Home?
“Much of the reason why policymakers have failed to
tackle the ‘housing crisis’ is because they have not grasped
that land is fundamentally different to other economic
inputs,” Ryan-Collins argues. “Land is immobile,
irreproducible and appreciates in value over time.”
According to Collins the fact that housing costs are
higher in Cape Town than normal people can reasonably
afford (those who have normal jobs), needs to be
understood primarily as a product of the banking system,
not a function of construction volumes and represents a
market failure, not a supply / demand imbalance.
Director of Prime Policy Research in Macroeconomics
and fellow of the New Economics Foundation in the UK, Ann
Pettifor agrees.
“Property is a physical, low-risk asset against which both
homeowners and financiers can borrow, quickly creating
new money,” she explains adding that the more people who
see property as an attractive investment, and the more money
that is poured into property, the more the prices will climb.
“It’s speculation in the property market that is fuelling
stratospheric house price rises, not shortage of supply and
speculators are convinced that prices will continue to rise
for ever,” she says.
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