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 14 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.