SA suburbs 'densifying'

The densification of South African suburbs is intensifying as cost and delivery realities dictate trends at the lower end of the market in particular.

And in the process, the proverbial South African 'dream' starter home of three bedrooms, two bathrooms and a double garage has been firmly consigned to history.

Moreover, the new scenario presents major challenges in terms of housing delivery in all its facets, including shortages of building materials, constraints in terms of skilled labour in the construction industry and an increasing scarcity of serviced land, says Gerhard Kotzé, CEO of the ERA South Africa property group.

"It comes as no surprise to the casual observer as well as the experts that our suburbs are becoming increasingly built up, with ever-increasing numbers of South Africans aspiring to property ownership," he says.

Cities getting crowded
"The statistics tell the story, showing a 23.7 percent year-on-year increase in 2004 in the number of homes completed of less than 80sqm, and a 20.4 percent increase in new flats and townhouses, many of which can be regarded as entry-level homes.

"By contrast, the number of new homes greater than 80sqm completed last year rose only 15.3 percent, according to Statistics South Africa."

In addition, he notes, there was a significant decrease in the number of plans passed during 2004 for single dwellings of less than 80sqm, but a 40.8 percent increase in the number of plans passed for new flats and townhouses, clearly suggesting that while smaller housing is now the name of the game, new market entrants are striving for something other — and better — than the proverbial 'pondok'.

Lack of capacity
However, says Kotzé, a worrying issue is the obvious lack of capacity of housing delivery mechanisms, accompanied by seemingly disproportionate increases in prices.

"Again the statistics tell the story, in that the total value of new houses, flats and townhouses completed last year rose by 33.7 percent to R11-billion, while the actual number of completions rose by only 20.7 percent.

"It remains to be seen whether delivery will improve during 2005, but the suggestion of the pundits is that the problems of supply and rising input costs, leading to increased prices, will curb demand going forward and provide a breathing space for delivery.

"What we may also see is stepped up release of Government land for low-cost open market or subsidised housing development. The Cosmo City project north of Randburg comes to mind. However, capacities in town planning departments will need to be increased and red tape reduced if this trend is to be maximised."

Meanwhile, he says, densification of land space if not of actual living space is already a reality in the middle and upper sectors of the market, albeit for somewhat different reasons, mainly the desire for higher security.

"In that sense therefore there is something of a convergence of the market which, in turn, is reflected in reduced demand for large tracts of private property."

Article from: http://iafrica.com