Population explosion: SA’s top growing cities hopelessly underprepared
Two mining towns, Rustenburg in the North West Province and Witbank in Mpumalanga, are South Africa’s fastest-growing cities. Between 1995 and 2015, Rustenburg’s population has grown at 411% (from 75,000 to 383,000), while Witbank has grown at 138% (from 156,000 to 371,000). This is according to United Nations data published in September.
SA city population growth, 1995 – 2015
|City||1995 Population||2015 Population||Growth (%)|
|Rustenburg||75 000||383 000||411%|
|Witbank||156 000||371 000||138%|
|Pretoria||951 000||2 059 000||117%|
|Johannesburg||4 529 000||9 399 000||108%|
|Soshanguve||472 000||775 000||64%|
|Bloemfontein||317 000||503 000||59%|
|East London||204 000||319 000||56%|
|Cape Town||2 394 000||3 660 000||53%|
|Vereeniging||800 000||1 155 000||44%|
|Durban||2 081 000||2 901 000||39%|
|Pietermaritzburg||356 000||495 000||39%|
|Port Elizabeth||911 000||1 179 000||29%|
And the trend for both cities shows no signs of slowing over the next 15 years. Rustenburg is expected to grow at 42% (383,000 to 544,000), while Witbank could see growth of 38% (371,000 to 512,000).
But just how well prepared are these cities for their current and future growth? What bulk infrastructure is in place or in the pipeline, and what effect does China’s slowdown and the loss of appetite for the mineral industry have in store for the workers on the mines and the real estate sector?
SA city population growth, 2015 – 2030
|City||2015 Population||2030 Population (Est.)||Growth (%)|
|Rustenburg||383 000||544 00||42%|
|Witbank||371 000||512 000||38%|
|Pretoria||2 059 000||2 701 000||31%|
|East London||319 000||397 000||24%|
|Bloemfontein||503 000||623 000||24%|
|Johannesburg||9 399 000||11 573 000||23%|
|Soshanguve||775 000||935 000||21%|
|Pietermaritzburg||495 000||588 000||19%|
|Vereeniging||1 155 000||1 370 000||19%|
|Cape Town||3 660 000||4 322 000||18%|
|Port Elizabeth||1 179 000||1 390 000||18%|
|Durban||2 901 000||3 349 000||15%|
Daphne Pick, Seeff’s MD in Witbank disputes that her city is still one of the fastest-growing (something she says was true five years ago), but that growth is being hampered by the town council’s inability to provide the required services.
“The pressure on our infrastructure is very high,” she says. “Council is under administration. Our present administrator is, however, leaving at the end of the month.
“Our sewerage system has yet to be upgraded, but maintenance is being done on the sub-stations and our roads are being repaired.”
According to Lightstone data, the average price of freehold property in the city is R907,000, up from R606,000 in 2010.
Sectional title prices are interesting. In 2013, the average price reached its highest value of R707,000, but is down 13% to R606,000 today.
Chris de Jager, manager for Pam Golding Properties Witbank, says a lot of new stock is being built at the moment, specifically in the security complex/townhouse market. “Stand-alone houses are built as required by customers,” he says, noting that no bulk infrastructure is upgraded. “The coal mines and Kusile Power Station project are driving the market.”
Pick says between 500 and 700 new units are developed annually, while a long-term low-cost housing project is being built on the city outskirts. Some 10,000 are planned to be developed.
“Affordable housing sells the quickest,” she says, noting buyers are mostly young and upcoming black first-time buyers. “Transfer costs are included in the purchase price and this seems to be a motivating factor (if not the most important one) for buying into new developments.
“The biggest developer in Witbank, Four Arrows, is planning to develop another 900 units in the next 12 months. It has also bought more land and is planning to develop same in future.”
Witbank is still considered a “mining town” – though it has diversified its economy – but what effect will the commodity slow down in China (South Africa’s biggest trading partner) have on the housing market?
“In the short term it will slow down the demand for housing, especially in the upper-market price range,” says de Jager. “The houses below R1m are still in huge demand. We have also found that investors are opting for the buy-to-let option as well-priced houses come onto the market and rental units become more popular during these times.”
Business interests in a mining town like Witbank are interrelated and therefore problems are felt by all alike, says Pick, noting that more housing stock is entering the market with less being sold.
“Eskom is presently purchasing coal from the mines at a lower price than it used to,” she says. “This has a slowing effect on the coal mining industry and it is said that the price at which Eskom is buying is barely equal to the costs associated with mining the product.
“The demands in the labour sector are not assisting the situation. A number of mines have closed down and large parts of the workforce have been retrenched in the past six months.”
Still, the completion of Khusile Power Station is six years off, adds Pick. “It is foreseen that thereafter about one third of the workforce will remain and will need housing of a permanent nature,” she says.
The Platinum Belt city of Rustenburg, which was one of the hardest hit during last year’s protracted platinum industry strike, may be better prepared for the coming 161,000 people in the next 15 years.
“Rustenburg is currently under immense pressure to provide the infrastructure required for this influx, but there are projects underway attempting to alleviate the pressure like road and housing infrastructure with the associated land, water and sanitation infrastructure,” says Seeff Rustenburg agent, Nicie Janse van Rensburg, who adds that developers are, however, being leaned on to fill the infrastructure void. “This has a devastating effect on the prices of erven and puts it above the lower income groups’ affordability, resulting in abandoned projects.”
Lightstone data shows the median price of freehold property is currently R942,000, while sectional title is R660,000.
“The lower income group, of which the majority make up the working population, requires urgent attention from all stakeholders,” says Janse van Rensburg. “The availability of suitable land around the city needs to be procured as a matter of urgency to manage the expected growth in this area.”
But this is not happening, according to Ian Straarup, area principal for Pam Golding Properties in Rustenburg. “Anglo American and other mines have been offering voluntary retrenchments to their staff as they try to restructure their operations to become profitable,” he says. “This has caused the property market to be relatively subdued as purchasers seem to be adopting a wait-and-see attitude to see what effect the retrenchments will have on the housing market.”
Loelie Ravenscroft, broker/manager for RE/MAX Platinum (Rustenburg), says the city’s housing market is split between buy-to-live and buy-to-let due to similar monthly costs.
“Rental prices are high in Rustenburg, therefore when clients can afford to buy, that is what they do,” he says. “Due to contract workers and commuting, we will always have tenants as well.”
Straarup says the average rental property that PGP has on its books is R6,355 per month, while sectional title tops the buying charts. “The most interest in property is from the new emerging market,” he says. “Many of these purchasers are buying for the first time and want to enter at an affordable level. With the relatively high cost of land, the sectional title option means that more square metres per R100,000 can be sold to the purchaser.”