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Joburg’s inclusionary housing policy will ‘stifle new development’

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Home prices and rentals obey the simple economic law of supply and demand. If supply is reduced and demand continues as before then home prices will rise and so will rentals.

With the Johannesburg municipality’s inclusionary housing policy planning to force developers to include social housing within new developments of over 20 units, developers will meaningfully reduce their development business in Johannesburg and any other municipality that follows this lead.

The Rent Control Act was enforced in the middle of the last century, due to returning soldiers from WW2 requiring affordable homes, and it stifled residential rental development as it limited what owners could charge for rental accommodation.

With Johannesburg receiving the most immigrants from within South Africa and from the rest of Africa, the demand for homes will grow, but the supply will dwindle as people choosing to spend R500,000 to R10m, and more, on a home will not choose to live with people in social housing within their development.

It’s human nature to want to live with people in your own socio-economic group and, when politicians interfere with these human market forces, disruptions occur which will affect the marketplace for generations to come.

Are Johannesburg politicians more concerned about winning votes to stay in power than the welfare of their citizens who put them in power, soon having to pay much higher prices and rentals for their accommodation?

This article is written anonymously due to the author’s prominence within the residential housing marketplace and for fear of retribution by the relevant authorities.


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