The economics of housing lower income populations in South Africa : challenges and opportunities in KwaZulu-Natal

Since 1994, approximately three million homes have been built for lower income households in South Africa, but as a result of population growth, immigration, increasing urbanization and systemic inefficiencies, such as corruption, the backlog of formal housing units stands at almost 1.5 million. This persistent unmet need for low-income and affordable housing is putting tremendous pressure on South African leaders to more efficiently implement the policies they have created and take a new approach to this decades old problem. The purpose of this thesis is to develop an understanding of the South African affordable housing market and the factors that are contributing to the chasm that exists between the demand for affordable housing and the limited supply of stock in this sector of the market. The study focuses on four major drivers -- three can be considered conventional market drivers and are land reform, construction processes and technology and access to financing. The fourth driver is an unconventional but significant factor and that is, corruption and its economic and societal impact. Of these four issues the most critical are land reform, due to well-designed but poorly executed policies, and corruption due to its profound impact on the affordable housing market. The seeming inability of the South African government to make effective progress in meeting the extreme shortfall in housing for lower income populations is leading to increased incidences of undeveloped, well-located land being informally settled, and is creating unrest in the population and political instability. This thesis discusses the discrete challenges within the land, construction and finance sectors, with special attention given to the industry-wide crippling force of corruption, which was uncovered during in-person interviews with South African developers, businessmen, educators and students. The author outlines potential solutions to mitigate corruption's impact through strengthened eradication efforts combined with economic approaches based on the concept of double marginalization.

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2013

Author dc:creator

• Barriére, Marcella M

Advisor dc:contributor.advisor

• Albert Saiz.

• Center for Real Estate. Program in Real Estate Development.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/84180

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/84180