Australia has a housing crisis caused by decades-old bad policy. Among them was tax breaks for developers to build housing for investment purposes. Now housing, including rentals for tiny units, are unaffordable to many. Demand far exceeds supply.
Cape Town has a housing problem which its developer-friendly policy exacerbates. Housing here is the most expensive in the country, pressured by foreign buyers, in-migration, Airbnb and digital nomads. A modest two-bedroom flat in a mid-tier suburb starts from R800,000, not even mentioning rents.
The city's policy is to sell available land at a discount presuming developers would build "affordable housing [sic]" - monthly income under R29,000 (Groundup). This is middle income - these people can buy or rent on the open market.
The first problem is the land will not be auctioned, a process where the highest bid wins. Do they accept the lowest offer?
The other flaw is discounting land does not necessarily lead to genuinely affordable units. The developer must make a return on investment, cost of capital and construction included. These are driven by market forces politicians don't control. The discount developers receive goes to profit. Inevitably, a flat or house described above is not truly affordable, never mind as social housing.
So, by discounting land, the city is giving a subsidy to a corporate entity hoping it makes good on the nebulous, unenforceable promise to pass the benefit to citizens. This seems like the failed Australian policy. In the long run, only developers get rich.
The policy has a veneer of respectability to cloak the city generating revenue from disposing unneeded land and from rates and levies off units built. If they were serious about affordability, they'd dedicate all available land to social housing (which I don't necessarily propose).
With 5 million people, Cape Town has reached urban development capacity. (Contrary belief, the city is dense - not middle-class suburbs, but townships certainly.) Its urban green and open space is under pressure. Discounting scarce land stock for middle income earners and investment-driven developers does not ameriolate the problem. Novel solutions are needed including from the community.
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