South Africa

More expensive houses in former homelands than in Cape Town

Informal economy expert GG Alcock said there are more houses worth over R1.5 million in former rural homelands than in Cape Town and surrounding areas.

This is one of the findings of Stephen Walters, founder of Galaxy Retail Solutions, who uses Google Earth and AI to determine where to build retail outlets.

“They use these tools to map out housing across South Africa to determine where to launch a new KFC or supermarket,” Alcock said.

“There are more houses worth R1.5 million or more in the former rural homelands than in the City of Cape Town,” he said.

“The former homelands, like KwaZulu and Transkei, have more expensive houses than the area stretching from Melkbosstrand to Gordons Bay.”

He added that the high number of houses worth R1.5 million or more in the former homelands are only in rural areas. They do not include urban areas.

“Every one of these houses was built with no formal credit. They used money generated and saved through societies or stokvels,” he said.

There has also been a boom in property values in townships across South Africa, with Soweto’s property market having doubled in price over the past decade.

Research from Seeff Property Group found that Soweto properties are highly lucrative compared to the rest of Johannesburg.

Property educator Khali Masooane told Newzroom Afrika that the Soweto market has doubled in price in the past decade.

A four-room house in Soweto was valued at around R150,000 ten years ago, and now, a similar house would be valued at R400,000 to R500,000.

She said this growth is not confined to Soweto but is a phenomenon that can be observed in townships across the country.

“Often, people had the notion that you live in the township and then move out, but now people are taking it back into themselves and want to reinvest in their space,” Masooane said.

She explained that townships are often considered more affordable than large metropolitan areas, and younger people are, therefore, opting to live where they grew up.

40% of buyers in Soweto are under the age of 35, and most of them are first-time buyers.

The booming housing sector in former homelands and townships shows that the informal economy is much stronger than what many people think.

Alcock estimates that the informal economy’s value is between R600 billion and R750 billion and growing much faster than the formal economy.

“Nielsen figures show the informal spaza shop sector is growing by 24% year-on-year. This is much higher than the formal sector, which grows by 14% a year,” he said.

“We need to rethink how businesses, government, and individuals can contribute to support informal economy entrepreneurs.”


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