There is a growing global trend of social service insecurity which presents a significant obstacle to creating cohesive and stable societies. Inadequate health care, housing, service delivery and an overall shrinking in social security used to be problems the that unemployed and destitute used to face alone. In recent times, however, these problems rear their ugly heads for South Africa’s low and middle -income earners.
South Africa finds itself within the midst of a housing crisis which has the potential to threaten an already fragile socio-political landscape. This systemic issue finds its root in a property market which has excluded low income households, a growing pressure for affordable urban infrastructure as urban populations soar, and a failure by the current housing regimens (RDP and BNG) to provide creative solutions to a multi-faceted issue.
When one speaks of the property market one is describing the institutional arrangements through which real property is used, traded and developed, and the wide range of actors involved in these processes. A recent trend amongst wealthy developers and banks is to extract real estate’s “trade value” as opposed to its “use value”. In other words, banks and similar institutions acquire property (usually in low income area’s) to develop the properties, increase their value and subsequently trade them. This creates a barrier to entry for low-income consumers as their incomes are not able to rise at the same proportion in which costs for housing or the value of housing increases. Often times this happens in the very area’s which should be protected from soaring house prices such as low-income areas.
The structural impediments presented to low income earners is also a cause of concern. The purchasing of a home is one of expensive purchases any individual is likely to make and low earners require loans to complete the payment of mortgages. Banks, however, see low-income earners as high-risk debtors because these household are oftentimes in debt (suggesting they will default on the loan). A history of dispossession often leaves these individuals with no other collateral to lay down when borrowing from the banks.
The government’s introduction of several housing schemes has done little in the way of providing indigent households with a safety net. The predominant entry point into the property market for low-income consumers is the Finance Linked Individual Subsidy program. This offers individual earning R3500-R1500 a month a once of subsidy, so that it reduces the amount of debt they need to take on from loaning at a bank. However, the people who fall within this bracket occupy a sort of “missing middle” in so far as they do not qualify for a free house but nonetheless do not have the resources to compete in the property market.
The above dynamic also occurs on the backdrop of gentrification. Gentrification is the process whereby dilapidated low-income areas are refurbished through urban renewal. This results in firstly, an increase in property values and secondly, an in-migration of higher-income residents who typically replace the original residents.
Often times it is argued that the rising value of property presents the chance for low income households to make a profit on their assets, but in many circumstances, this is simply not possible. The correlative of rising property values is the rise of the property rates attached to property i.e. the costs of maintaining the property. One’s water and electricity levies appreciate or depreciate according to the value of the property. Again, the appreciation of the property’s value and the growth of income in lower earning households is not commensurate, leading to these consumers to channel a disproportionate amount of their income on paying rates for the property.
Woodstock and Bo-Kaap have been the poster children for gentrification and its consequences in the form of forced removal and evictions. The processes under way in these Cape Town communities present a microcosm of South Africa’s broader structural problems of inequality, where poor, indigent and vulnerable peoples receive little to no shelter from the stark reality of market forces and ineffective policies. Given class and “race” in South Africa have often been straddled on the same horse, the consequences of gentrification have racialized outcomes, particularly in Cape Town, where low-income industrial so-called “coloured” communities are being displaced by young, generally white, professionals who often have access to family wealth that can prop up low wages where necessary.
South Africa finds itself lodged in a profound crisis that needs urgent addressing. Government should prioritize making housing affordable for the poor and marginalized and progressive civil society forces need to support movements such as Ndifuna Ukwazi and the Legal Resources Center that are actively fighting for housing equality. Failure to do this will contribute to a further degradation of our social landscape.
By Bongi Maseko