Determining the impact of affordable housing development on property prices of adjacent neighbourhoods in South Africa

Abstract

The urban settlement patterns of today are still influenced by urban planning policies from the past era, whatever great strides have been made to deliver adequate and affordable housing in well-located areas. Section 26 of the Constitution of South Africa states that every citizen has the right to adequate housing. It is for this reason that the JB Marks Municipality, located in the North West province, recommended a housing development programme for the inner-city parks and existing open spaces in Potchefstroom to combat the deficit supply of affordable housing and to provide access to urban amenities and places of employment. However, there is growing concern about the effect on residential property prices, infrastructure restrictions and capacity of such development on the existing, adjacent neighbourhoods. This dissertation investigates the effects of a new affordable housing development on the property prices in an existing adjacent neighbourhood. The effects are measured by evaluating similar and existing case studies in South Africa and the results provide policy and development recommendations for the proposed affordable housing development program in Potchefstroom, North West province. A hedonic price model provides insight into how the structural and location characteristics of the properties in the adjacent neighbourhood could indicate whether the location is ideal for such a development. The results indicate that it is possible to integrate an affordable housing project with an existing neighbourhood without negatively influencing the property prices if the structural characteristics of these areas align.