Moving up the Ladder or Stuck on the Bottom Rung? Homeownership as a Solution to Poverty in Urban South Africa

Abstract

In the global South, policies providing property titles to low-income households are increasingly implemented as a solution to poverty. Integrating poor households into the capitalist economy using state-subsidized homeownership is intended to provide poor people with an asset that can be used in a productive manner. In this article the South African "housing subsidy system" is assessed using quantitative and qualitative data from in-depth research in a state-subsidized housing settlement in the city of Cape Town. The findings show that while state-subsidized property ownership provides long-term shelter and tenure security to low-income households, houses have mixed value as a financial asset. Although state-subsidized houses in South Africa are a financially tradable asset, transaction values are too low for low-income vendors to reach the next rung on the housing ladder, the township market. Furthermore, low-income homeowners are reticent to use their (typically primary) asset as collateral security for credit, and thus property ownership is not providing the financial returns that titling theories assume.

Then I'll Huff, and I'll Puff, and I'll . . . : A Natural Experiment on Property Titling, Housing Improvement and the Psychology of Tenure Security

“…Advocates of titling approaches have tended to focus on certain economic dimensions of titling, such as the ability to use property as collateral to access credit which is assumed to be critical for investment in land and housing, and also to stimulate entrepreneurship, which would then further add to the generation of capital (World Bank, 1993; 2003; de Soto, 2000). Existing empirical evidence is not supportive of such claims (Gilbert, 2002; Durand‐Lasserve and Selod, 2007; Lemanski, 2011) and nor are the results of this study. Of all the titled households in the sample, only two had obtained a bank loan.…”

Land registration effectiveness in a state-subsidised housing project in Mbekweni, South Africa

“…Often, a walk around a housing project will show numerous extensions and in some cases the original starter house has been demolished and replaced by a larger house. Extensions to houses are often financed organically as funds become available through day-to-day earnings or using loans from an employer or family members (Payne et al, 2008;Lemanski, 2010;Roux, 2013;Charlton, 2013;Roux, 2014, 2016b).…”

The threshold effects of household indebtedness on multidimensional poverty

“…This could be influenced by the nature of housing that people use. Rapid urban population growth makes it more difficult for government to provide enough decent free RDP housing to low-income families (Huchzermeyer, 2011;Lemanski, 2011). The housing backlog was 2.3 million and rising in 2014, and community protests over housing and services have escalated (Turok, 2014).…”