Black middle-income housing and asset building in Mangaung, South Africa

Abstract

Asset-building policies are used worldwide to reduce state welfare commitments. In the Global South, including South Africa, asset-based housing development is thought to help reduce poverty. This study investigated asset building and homeownership in a sample of South Africa’s emerging black middle class. Interviews with 244 black middle-class households in Mangaung revealed asset value creation and heavy dependence on mortgage finance. Levels of mortgage default were low, although households with recently secured mortgages struggled to pay them off. We found little evidence that property-owning is helping these households to move out of poverty. Their ability to afford mortgage loans appeared to be directly related to their own efforts and human capital. Very few had considered downsizing as an option, possibly because ownership of a house has social value, for passing on to the next generation. Asset building was still in its early stages and, because these households had been denied equal opportunities and barred from homeownership by the apartheid regime, very few intergenerational transfers had yet occurred.

Race and Space in the Postcolony: A Relational Study on Urban Planning Under Racial Capitalism in Brazil and South Africa

“…Furthermore, RDP/BNG housing schemes are criticized by their quantitative focus, inability to respond to local conditions, and failure to deliver low-cost housing in urban centers, thus producing dormitory settlements far from amenities and jobs, which are low-paying (Harrison and Todes 2015; Turok and Borel-Saladin 2014; Turok and Scheba 2019). Lastly, this strategy represents “asset-based welfare” (Litheko et al 2019), which presupposes access to residential property as a means of inclusion: those previously excluded from the market can benefit from subsidies to accumulate assets and create wealth, climb the housing ownership ladder, and thereby escape poverty.…”

How does transfer duty relates to housing demand in the city of Johannesburg, South Africa?

“…The attempt by the South African Government to continually enact new legal and policy instruments – notwithstanding the mix of successes and failures – towards supporting the development of a robust housing delivery value chain can be seen in the context of “asset-based” or “property-based” welfare approach (for a complete of asset-based welfare literature in the both the global north and south, including South Africa, see Litheko et al , 2019). Other areas specifically tailored to boost the market-based housing delivery value chain can been seen in the context of asset-based or property-based welfare approach as well.…”

“…These benefits are realized as direct and indirect effects as well as short-, medium- to long-term at the macro level. At the household level, housing represents the largest investments that households make in their lifetime and often the most prominent asset that households transfer between generations in the modern capitalist system (Litheko et al , 2019, citing Piketty, 2014). Wolff (2004) describes that owner-occupied housing provides services directly to their owner; as a wealth asset, it can be converted directly into cash and thus provide for immediate consumption needs; as a financial asset, it can provide liquidity to a family in times of economic stress, such as occasioned by unemployment, sickness or family break-up; and in a representative democracy, the distribution of power is often related to the distribution of wealth, including wealth held in housing.…”