The new General Household Survey (GHS) report recently released by StatsSA has huge implications for the residential property sector.
For a start, the survey found that about half of all South Africans over the age of 18 are single, either because they have never been married or because they are now divorced or widowed. What is more, that percentage rockets among 18 to 34-year-olds, with 95% of men in this age group and 86% of women having never been married and not currently living with a partner either.
As a result, the rate of new household formation in SA – which usually happens as people move out of their childhood homes and set up on their own - is growing at 2.4% per year, while the rate of population growth is only 1.3% a year, and what this means is that we are probably not only going to need a lot more homes to be built, but a lot more homes suited to young singles, single parents and single seniors.
According to StatsSA, the number of households in SA has grown from 12.8 million to 16.7 million over the past 10 years – and less than 40% of these now consist of families with four or more members. Almost 26% (or more than 4 million) contain just one person, while a total of 62% are composed of three people or less.
Meanwhile, although the number of households living in formal homes has risen by 5.5 million since 2002 to a total of 13.5 million currently, there has also been an increase in the number of those living in informal homes, from 1.5 million to almost 2.2 million (13.1%) – with the remainder living in traditional or other homes.
New formal homes - opportunities and possibilities
In other words, the provision of new formal homes has also not kept pace with the growth in the number of households – and there are vast opportunities and possibilities inherent in this fact for developers, builders, banks, investors, estate agents, originators like ourselves and many others involved in or associated with the residential property sector.
The potential for job creation and empowering people over time to become homeowners rather than tenants is also massive. Research has shown, for example, that every home built gives rise to between one and three permanent jobs.
It has also shown the benefits of home ownership in terms of social cohesion and private wealth creation, but right now even the creation of more formal rental accommodation that is affordable would be a significant advance for almost one million households that currently rent informal homes – mostly close to SA’s major urban areas.
It would also create many new opportunities for buy-to-let investors, although the GHS shows that this market is already fairly large, with some 3.4 million households currently occupying formal rental accommodation.
Consequently, we hope to see vigorous implementation of government’s plans, announced during the recent State of the Nation Address, to rapidly identify and allocate underutilised public land close to the metros for new affordable housing projects. In addition, we would like to see more streamlined access to the Flisp government housing subsidy for those earning between R3,500 and R22,000.