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Is high density living really unappealing to South Africans?

FNB property sector strategist, John Loos recently posed this question and we take a closer look at his answer and the subsequent report.

It has been a common belief that South Africans prefer low density living and that most of us are averse to the “high rise living” concept, but this belief might be somewhat exaggerated.

Spacious living around our major cities can be attributed to high levels of economic infrastructure development up and until the mid-1970’s, which allowed urban sprawl to take place with relative ease.
 
However according to Loos we are forgetting that South Africa does in fact have a history of high density living amongst the middle class. He refers to many middle class citizens which lived in areas such as Hillbrow and Berea in Johannesburg before the city centre took a turn for the worse. 

These areas were very popular with the young working class households who would live in the city centres on a long term basis before moving out to the more spacious suburbs later on.

He notes that inner city living was very popular amongst the middle class during those days as it offered an affordable accommodation solution for young graduates, gave them the “low maintenance/lock up and go” convenience that many wanted, and of course kept their work-related commuting costs and time down. Add to this that many of the city’s famous evening entertainment venues, to which the “Yuppie” set were so attracted, were in close proximity to such areas, and it was almost a “no brainer”.

The lesson from the likes of Hillbrow/Berea’s more “illustrious” past, therefore, is that high density/high rise living can be attractive, if it is well run and not lacking the necessary leisure, entertainment, education, health and transport amenities and services.

“Regardless of the answer, densification is a reality,” he says.

According to FNB’s valuations data indications over the last decade or so point to an increase in Sectional Title units, as they make up 15% of properties built during this period. 

“This doesn’t sound like a high percentage yet, but it well-exceeds the percentage in the few decades that came before. In addition, of Full Title Units valued that were built from 2010 to 2013, the average stand size was 498 square metres. This represents a big decline from a high of 1068 square metres average for the Full Title properties built from 1970 to 1974. Of those built from 2010 to 2013, 10% had swimming pools, down from the 40.6% of those built from 1980 to 1984,” he says.

As stand size declines, at a faster rate than average Full Title building size, the average Full Title Land Utilisation rate, by build date, has crept up from 20.7% for homes built from 1970 to 74, to around 30% over the past decade.

A general theme since the 1970s has thus been clear from the FNB Property Barometer data…..smaller stands, smaller building size, and less leisure amenities on the property. Much of this has been done to address a mounting land scarcity from the time that Government Economic Infrastructure Spend slumped in the late-1970s as the then-Government’s fiscal position deteriorated.

This category of General Government Spending has improved marginally in recent years to 2.3% of GDP by 2013, but remains far below the levels of the 1960s and 1970s.

It has been simple economics in the form of growing land scarcity as the urban population increases, and rising competition from consumer goods/services, that has been a big driver of densification and the move to living in smaller-sized properties.

However, the big change in the next 10 years or more, compared to the past, will need to be a greater effort to create a more orderly and planned densification, with a likely bigger focus on building “higher”.

High density demand in and around the country’s prime business nodes can be expected to proliferate, as well as on any “state of the art” transport corridors, such as in close proximity to certain Gautrain stations. Such transport corridors can thus be expected to be a key driver of residential property values in close proximity in the coming years.

Read the full report here


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