Moqhaka – Free State

Working for integration Dr Kenneth Kaunda Merafong City Lesedi Tswaing District Emfuleni Municipality Tlokwe City Gert Sibande Council District Municipality Dipaleseng City of Metsimaholo Matlosana Free State

Maquassi Hills Fezile Dabi Mafube Ngwathe District Municipality

Nala Moqhaka

Lejweleputswa N1 Nketoana District Municipality

Matjhabeng Thabo Mofutsanyane District Municipality Tswelopele Dihlabeng Setsoto

Masilonyana Sources: Esri, USGS, NOAA

Moqhaka – Free State

Housing Market Overview Human Settlements Mining Town Intervention 2008 – 2013 The Housing Development Agency (HDA) Block A, Riviera Office Park, 6 – 10 Riviera Road, Killarney, Johannesburg PO Box 3209, Houghton, South Africa 2041 Tel: +27 11 544 1000 Fax: +27 11 544 1006/7

Acknowledgements The Centre for Affordable Housing Finance (CAHF) in Africa, www.housingfinanceafrica.org Coordinated by Karishma Busgeeth & Johan Minnie for the HDA

Disclaimer Reasonable care has been taken in the preparation of this report. The information contained herein has been derived from sources believed to be accurate and reliable. The Housing Development Agency does not assume responsibility for any error, omission or opinion contained herein, including but not limited to any decisions made based on the content of this report.

1. Frequently Used Acronyms 1

2. Introduction 2

3. Context 5

4. Context: Mining Sector Overview 6

5. Context: Housing 7

6. Context: Market Reports 8

7. Key Findings: Housing Market Overview 9

8. Housing Performance Profile 10

9. Market Size 16

10. Market Activity 21

11. Lending Activity 29

12. Leverage 33

13. Affordability Profile 39

14. Rental Index 40

15. Key Concepts 42

16. Source List 45

1. Frequently Used Acronyms

CAHF – Centre for Affordable Housing Finance in Africa GDP – Gross Domestic Product GVA – Gross Value Added HDA – Housing Development Agency HPI – Housing Performance Index IDP – Integrated Development Plan LM – Local Municipality NU – Non-Urban, StatsSA subplace designation RDP – Reconstruction and Development Programme SDF – Spatial Development Framework SP – Subplace StatsSA – Statistics South Africa

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 2. Introduction

The Housing Development Agency (HDA) is a national public development agency that promotes sustainable communities by making well-located land and buildings available for the development of human settlements. As its primary activity, the HDA assembles and releases state, private and communal land and buildings for development. In addition, the HDA provides project delivery support services to organs of state at local, provincial and national levels.

In setting the agenda and asserting its role in the housing continuum, the HDA realised that there is a gap in the provision of accurate and easy-to-understand information regarding the property market, particularly in previously overlooked areas including the mining towns.

The development of this report is a result of this gap. It aims to explore and present an overview of the formal housing markets in Matjhabeng, Moqhaka, Merafong, Randfontein, Westonaria, Thabazimbi, Greater Tubatse, Elias Motsoaledi, Lephalale, Fetakgomo, eMalahleni, City of Matlosana, Mogale City, Ephraim Mogale, Steve Tshwete, Thaba Chweu, Tsantsabane, Ga-Sekgonyana, Gamagara, Kgetlengrivier, Madibeng, Moses Kotane and Rustenburg so as to change perceptions of affordable markets and as such, expand and deliver affordable housing options within South Africa’s municipalities.

The study was undertaken over a three-month period, relying mainly on the high level indicators developed by the Centre for Affordable Housing Finance in Africa which considered the market conditions, existing market size and activity, average prices and values, market growth and lending activity in the area to support a better understanding of the opportunity and the impact of various housing policy interventions. The centre also highlighted the range of opportunities across areas to stimulate the affordable housing market in South African municipalities.

The methodology also included site visits to eMalahleni, Randfontein, Westonaria and Rustenburg so as to confirm findings and to gain more insights about the current housing circumstances.

The report is intended for use by all stakeholders involved in planning including professionals in municipalities, Government officials, private sector, investors, developers and urban planners, for the mission of enticing a range of development options. The report does not address housing supply for the lowest income levels but rather seeks to make the case for expanding the gap market in order to entice private sector engagement more effectively.

2.1 Report Contents

The report covers the following aspects of housing markets through maps, charts and graphs to highlight understanding across the municipality and at the neighbourhood level, where housing markets function.

1. Housing Performance Proﬁle – the pace of growth by suburb, on maps and in charts, as measured by the Housing Performance Index 2. Market Size – total number and distribution of residential properties, households, values and sales prices, key demographic indicators 3. Market Activity – properties, sales and new properties and resales over time 4. Lending Activity – sales and loans by lender 5. Affordability Proﬁle – affordability based on local incomes, compared to sales price, housing gaps and affordability ratios 6. Leverage – the value of equity available for purchasing new homes 7. Rental Index – those areas most prime for quality, dense, professionally managed rental housing

2.2 Deﬁnitions and Methodology

For housing supply, title and deeds records were merged at the suburb level, mapped and ranked through the Citymark dashboard. Priority has been placed on actual transaction datasets from familiar sources that can be geocoded to the subplace level, trended over time and updated regularly. For housing demand, StatsSA data was applied as the most consistently collected, widely understood and most common source of demographic data in the Country.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 2.3 Benchmarks

Benchmarks are indicators used to compare performance across areas and are valuable for understanding meaning. Each indicator was created at the local, municipal and national levels in order to measure performance within and across markets. These benchmarks also highlight areas or trends which are outperforming the overall market in certain ways and might be most receptive to a variety of new housing development options.

2.4 Site Visits

As mentioned, the team conducted four site visits to eMalahleni, Randfontein, Westonaria and Rustenburg. These visits provided the chance to confirm findings from the data and chat informally with residents about their current housing circumstances: where they had moved from, where they were currently living and how affordable it was and where they were headed, including their ambitions and concerns. This helps to provide a sense of the housing continuum in the town – what choices residents feel empowered by and what constraints keep them from realising their dreams and aspirations. Residents who were engaged came from informal settlements, brand new RDP homes and a stalled RDP project which had recently been reactivated by the city.

Some of the key insights from these site visits were:

• Residents may not know exactly what their home might be worth but they are very aware that their home has a value, which includes stability and security for themselves and a better future for their families • Many residents use their homes to supplement their own income, including renting shacks and rooms and operating home-based businesses • There might be a relationship between how the houses are handed over and the sense of ownership (as evidenced by improvements to the homes) • Everyone we spoke to understood the importance of a title deed, that the title deed proved (secured) ownership, even if in a few cases, they were not sure of its status or how to get one • Most people mentioned a better future for their children as an integral part of the importance of homeownership • Residents were aware that there is an acute shortage of housing opportunities and that despite having their homes, they were surrounded by others without adequate housing

Many people understood housing markets around them intuitively – where the better houses were closer to jobs and transportation and what the barriers were – the price, the inconvenience and the cash required to access the houses.

2.5 Using this Report

This report is intended to provide a high-level view of the mining town housing markets overall and by neighbourhood, within areas of particular interest by measuring and comparing housing market performance amongst each other and with the municipality. This report highlights connections and implications from the findings that are of significant interest to the HDA. The report does not seek to understand why things are but offers general ideas based on experience with housing markets and new learning about mining town housing markets from these reports.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report The report findings emphasise opportunity as opposed to risk or failure. Opportunities are defined as conditions or indicators within areas which can show:

• The ways in which areas or markets are behaving positively (such as growing more quickly) or showing strength (such as stability and consistency) • The ways in which areas can be connected to common strategies that promote growth, investment or sustainability (such as proximity to transit or density) • A more accurate picture of the real value of areas in ways that can leverage economic investment (such as equity, lending levels and new registrations) • Better ways in which risk can be measured and accounted for (such as timing, scale, or location risk) • A more comprehensive scope or scale of markets, to better estimate and project market intervention (such as property or population size, absorption rates, or patterns of behaviour) • Ways to challenge and overcome those perceptions or assumptions that might stymie investment, or slow growth

This report is not intended to provide a complete final picture of market conditions or demographic circumstances. It does not reflect conditions in the informal market, nor general attitudes. It is not intended to be the last word on market potential but rather the ﬁrst: how can current conditions present opportunities for better housing options and improved market performance? Where are places that might be performing better in some ways, which might provide areas of opportunity, and how? The highest and best use of this report is to suggest new ways to support the growth of affordable housing in South African mining towns, by exploring and reconsidering areas for new investment, expanding existing investment and promoting policies and programmes which can support and entice that development. It can also imply the impact of ongoing investment and programmes activities.

2.6 About Formal Housing Markets

This report relies on the South African deeds registry as the basis for analysing local housing markets. Thus, the report only measures the formal housing market, which can be defined as those residential properties which have been formally titled to a specific owner or group of owners. While this excludes a large part of the human housing condition in these towns, the advantage of focusing on the formal housing market is that it offers a better understanding of that part of the residential property market which is most opportune for leverage and investment interventions in ways previously not understood.

Taking into consideration the housing backlog from StatsSA, informal settlements and human mobility, housing markets are quite fluid and difficult to measure. Understanding housing markets more completely is one advantage of the titling initiatives recommended by many housing policy and planning advocates across the Country.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 3. Context

3.1 Municipal and Regional Context

Key aspects of the city are shown from here for contextual purposes, which have been published on the city’s website. These aspects are summarised from its 2014 IDP to give important insights to the market overall:

• “Moqhaka is situated in Fezelle Dabi District Municipality in the Free State Province” • “The Kroonstad/Maokeng/Brentpark urban unit is situated adjacent to the N1 national road and located next to one of the largest and most important four-way railway junctions in South Africa. This positioning emphasises the ideal and strategic location of the town” • “The Greater Kroonstad is the centre of a large agricultural community that plays an important role in the economy of the region. Industrial activities also contribute significantly to the districts economy” • “The Department of Correctional Services and the School of Engineer’s Military bases are situated in Kroonstad, hence the population of Kroonstad regularly fluctuates depending on the intake by these institutions every season” • ”The Vaal River borders the western boundary of the area and the Vals and Renoster Rivers drain through the area towards the Vaal River. The rivers play a significant role in providing the raw water supply to Kroonstad, Steynsrus and Viljoenskroon respectively”

3.2 Socio-Economic Proﬁle:

The municipality’s current demographic information is drawn from the HDA Municipal Profiles and from the 2001 – 2011 Census Data:

• “Moqhaka has a population of 160,532” • “There was a -0.45% population growth between 2001 – 2011” • “In 2011, over 35.2% of the population was unemployed, and the dependency ratio was 50.5%” • “There are 45,661 households in Moqhaka, with an average household size of 3.2 people” • “88.7% live in formal dwellings” • “80.37% of the households have flush toilets

connected to a sewerage system, piped water inside the dwelling; weekly refuse removal and electricity for lighting”

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 4. Context: Mining Sector Overview

This brief industry profile is provided to help understand how the mining sector might affect and engage housing in the mining towns. The mining policies are not specific to the towns – that information is not available. This information has been included because of the mineral mined, the regional location, or specific city references (this report does not assess programme efficacy or impact).

The Moqhaka Local Municipality is located in the Free State Province. A total of nine commodities are currently being exploited in the Free State, of which gold and its by-products (uranium, silver, platinum group metals and sulphuric acid) are by far the most important, followed by diamonds and coal.

4.1 Mining Industry Proﬁle

• Ferrous and base metals are not exploited at all, while industrial minerals play an important role. Revenue from the Free State Province’s mineral products is the fourth highest within South Africa (after Gauteng, North-West and Mpumalanga’s Province), with total sales in 1994 being valued at R7 418 million (R7 037 million in 2000) • The larger producing mines in the Free State produce gold, coal and diamonds • The smaller producing mines in the Free State produce clay, limestone, salt, gypsum, granite and sand and stone aggregate • Commodities with potential for future mining include titanium, zircon, rare earths and thorium • Though a substantial quantity of gold remains in the field, the general lower grades and weak gold prices, combined with increasing production costs in real terms – as the deposits are mined at ever-deeper levels – means that some of the gold mines have become marginal to sub-economic and face closure in the near future • A total of 16 gold mines are still active in the Free State goldfield, namely the Beatrix; Matjhabeng; Free State Saaiplaas; HJ Joel; Harmoney, amongst others • The Vereeniging-Sasolburg coalfield ranks third in South Africa in order of importance, while the Free State supplies a saleable output of 10,5% of the national coal output • Two mines produce coal, namely the New Vaal Colliery (owned by Anglo American) and Sigma Mine, both exploiting bituminous coal • Four mines are currently producing diamonds from Kimberlite rock, namely the Samada; Koffiefontein; Salene (Star) and Sonnenberg (Loxton)

4.2 Housing in the Mining Sector

Due to of the remote locations of many mining operations, mining companies have long histories of providing housing solutions for its employees, from executive management to miners. Different approaches to housing policies vary and are not discussed in specific terms. Knowing the general Mine Housing Policies assists in understanding the effects on the housing markets in their entirety in the towns. Unlike large metropolitan areas where housing markets grew more organically (with some historical master planning involved), these towns were largely designed intentionally to serve the interests of the mining franchises above them. The following is only indicative of each company’s general approach; the housing models in each town are approached differently and more specific to their context. Essentially, understanding the housing options offered by the mining companies is an important factor in understanding local housing markets.

Moqhaka’s primary extractive is diamonds, gold and coal. The prominent mines in Free State are: Beatrix; Matjhabeng;Free State Saaiplaas; HJ Joel; Harmoney; Vaal Colliery (owned by Anglo American); Sigma Mine; Kimberlite rock; namely the Samada; Koffiefontein; Salene (Star) and Sonnenberg (Loxton). Their Mine Housing Policies outline the following:

• Anglo American committed more than R2 billion to facilitate home ownership and achieve the Mining Charter target of ‘one person per room’ through 2014 • Anglo American currently offers a number of different housing options, ranging from housing allowances to houses built for employees

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 5. Context: Housing

The municipality has identified the following challenges and opportunities from its IDP:

5.1 Housing Challenges:

• “According to StatsSA, as quoted in the HDA Municipal Profile, the housing backlog in Moqhaka was 5,987 in 2011“ • “During 2007, Moqhaka recorded a lower proportion of households living in formal dwellings (52.2%), compared with the provincial average (71%)” • “The municipality has identified a need to acquire additional land for housing to develop a housing information centre” • “The municipality has also identified the need to upgrade all hostels into family units”

5.2 Housing Strategies:

• “Acquire and develop sufficient land to provide for the current backlogs” • “Replace all temporary structures with permanent dwellings” • “Facilitate housing subsidy applications to assist the community in obtaining Government subsidies” • “Apply for various housing subsidy schemes in order to build the maximum number of houses, according to grants allocated, to replace all temporary structures” • “Determine the needs for housing for farm workers (both on and off farm projects)“ • “Perform stock take of persons needing housing or land to be used for the construction of residential units” • “Quantify the area needed and cost of acquisition and development where necessary”

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 6. Context: Market Reports

HDA Mining Town reports market coverage 6.1 Report Coverage Moqhaka, Data by suburb of census and formal deeds registry data, 2013 It is important to keep in mind that Vaal South Reefs Gold Mine these reports only cover the formal

Vierfontein SP housing market, as captured by the Deeds Registry. Thus, there are four Viljoenskroon SP layers of information in the report:

1. Total StatsSA suburbs

Moqhaka NU 2. Suburbs with residential properties; 3. Suburbs with residential properties sold 4. Suburbs with residential properties sold with a bond Steynsrus SP

Source: Stats SA Census, 2011, South African Deeds Registry via Lightstone (Pty) Ltd, 2015.

Data coverage This map shows all the census suburbs 1 4 in the town (pink) to all the suburbs with residential properties with bonded sales (dark red). The chart shows what percentage of the town has a formal Moqhaka Housing Market Report Coverage residential housing market. This may Total Census Subplaces (SP’s) 38 help explain some of the maps, and Total SP’s with registered residential 35 92% why some suburbs are included and properties some may be omitted. For example, information on bonded sales will only Total SP’s with sales 31 82% reference suburbs in which bonded Total SP’s with bonded sales 31 82% sales took place.

Market Area by the Numbers Suburbs 38 Suburbs with residential properties 35 Households 45 661 Residential properties 22 063 Housing Backlog 5 987 Backlog as percent of all properties 27 % Households to properties ratio 2.07 Average monthly income R 13 500 Average property value R 254 000 Average sales price R 386 000 Total residential value R 5.5 billion

Source: Centre for Affordable Housing Finance in Africa, Lightstone, StatsSA

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 7. Key Findings: Housing Market Overview

Moqhaka’s housing market has experienced a spike in upward growth from 2013, which may be strongly affected by the number of freehold properties that have been selling significantly above their values and increasing urbanisation of previously undeveloped or rural areas within the municipality. This creates an opportunity for markets to be carefully assessed in order to best position the next wave of growth.

Moqhaka’s affordability ratio of 1.09 is below both the national and the mining town averageof 3 and 2.8 respectively. In areas with sales, the affordability ratio was a little over 1 to 1, meaning the average income could afford the average house and less disparity between incomes and prices existed. In some areas, sales prices are very low, probably the result of lack of credit access, forcing sellers to sell for whatever cash might be offered regardless of how much the house may be worth. This may prioritise housing strategies and solutions, which propose creative financing tools and techniques to reduce financial barriers (such as down payments, interest rates and principal requirements) as well as unlocking equity, rather than simply trying to push costs down.

In Moqhaka, 48% of residential properties are Government-sponsored units which presents an important opportunity to leverage that investment in affordable housing in the years ahead, as owners seek to sell and move up the housing continuum, if opportunities are positioned properly. Average equity in these areas increases purchasing power, putting moderately priced housing within reach of lower income families. This situation can be used to drive developers to build more gap housing, and financiers to finance low priced acquisition loans.

Generally, Moqhaka has considerable diversity and integration of housing values, however property types are predominantly freehold. There is notable sales activity throughout the municipality but properties are generally transacting below their value. Formal, mixed-income housing development provides adequate returns for developers while providing lower income homes, and creates a market less reliant on Government and mining intervention.

Moqhaka has experienced an incremental increase in lending from all lenders, including non- traditional lenders. The lending portfolio of other lenders has almost doubled from 2008 – 2013. With 48% of all housing units sponsored by the Government and equity available for properties under R500 000, it will be an important strategy to encourage traditional and new lenders to develop creative loan programmes targeting those homeowners in order to make it easier for them to sell their homes, unlock the value of those homes, and allow owners to move up the housing continuum.

The opportunity for rental housing development within Moqhaka is fair within specific areas. Data indicates that 28% of households are renting, which is near the average rate of 31% for these mining towns. Those areas with greater density, modest incomes, and affordability challenges are more likely to support quality, professionally managed, affordable rental housing. Rental housing also provides flexibility to employers and workers as mining markets expand and contract from time to time.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 8. Housing Performance Proﬁle

8.1 Key Findings: Housing Performance Index

Moqhaka’s housing market has experienced a spike in upward growth since 2013, which may be strongly affected by the number of subplaces where housing markets are growing, freehold properties which have been selling significantly above their values and the increasing urbaniaation of previously undeveloped or rural areas within the municipality. Mining activity, which is not included in this report, may be a factor as well.

Recent growth has surged a bit, creating an opportunity for markets to be carefully assessed in order to best position the next wave of growth. Housing options are not currently diversely distributed across the municipality.

8.2 Policy Implications

‘With a growing market, such as Moqhaka, meeting housing demand will be a crucial factor in stabilising the town through this period of growth. In slow-growth neighbourhoods, where most of the lower priced housing currently exists, housing will need to be built more affordably, but will need to be situated well to better integrate housing markets. Site development initiatives should include rental housing to meet the increased demand.

8.3 Quick Deﬁnitions:

Housing Performance Index (HPI): provides an understanding of local housing market performance by tracking six key indicators which most effectively convey fundamental components of real estate markets and then comparing to the results for the entire municipal property market to determine areas of growth or strength relative to the entire metro.

Housing Performance Profile: this describes housing market performance of local areas as growing (those areas where the index is 6.5 or higher), stable (the index is 4 or higher) or slow (the index is less than 4) compared to the metro in which it is located.

Formal Housing Market: residential properties that are registered on the South African deeds registry. This does not include informal settlements or other houses otherwise not on the deeds registry.

Indicators: suburb-level measures used to convey a more complete understanding of housing markets, sometimes a point of data (such as number of properties), or a calculated factor (such as the housing index or the affordability ratio).

Housing Continuum: a range of housing options which are available to a wide range of income levels, budgets, housing types and ownership opportunities.

Bonded Sales: the total residential properties that were transacted with a bond collateralised or secured by that property.

New Registrations: residential properties that have never appeared on the deeds registry before. This is an important indicator of the growth of a market, whether the property has just been built or was built previously and never registered.

Churn: an indicator of the sales activity within an area similar to turnover, it is the number of residential sales transactions divided by the total number of properties.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Housing Performance Index Moqhaka, 2013 8.4 The Housing Performance Index (HPI) Market growth of six key housing market indicators, compared to the metro This map identifies the Housing Performance Index by suburb (top) and total residential properties (bottom), to provide a sense of how local property markets are performing compared to the metro as a whole. The Housing Performance Index (HPI) provides

Vierfontein SP a glimpse of the formal housing market only, and does not include

Rammulotsi SP any demographic information. The weights were determined by

Viljoenskroon SP how well the indicator reflects activity, increased investment and demand (and how reliably the indicator can be measured).

This information is useful in understanding how the formal market is behaving (which is influenced by the presence of mines, informal settlements and the people who move in and around the towns). This picture is intended to help understand how key housing sector

The Meadows SH partners (developers or investors) seek and measure opportunity

Steenwerp Constantia in order to better inform and coordinate Government planning Kroonstad Industrial Kroonstad SH processes and private sector motivation.

“Growing” suburbs are areas which exceed the metro’s rate of change in any four of six key market indicators. “Stable” areas meet or beat the metro in at least three indicators, and “Slow” Matlwangtlwang SP areas are growing at rates less than the metro in two (or fewer) of Steynsrus SP the six indicators. While an index provides quick understanding, it is important to look closely at the indicators themselves to understand the underlying factors affecting market growth and stability.

Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry.

Housing Performance Profile Growing Stable Slow Null CAHF Housing Performance Index Indicator Measured Implies Weight Housing Performance Index Moqhaka, 2013 Market growth profile by suburb, with property volume Price Average sales Appreciation 25% price Value Average Appreciation 25% property value Transactions Number of sales Demand 15% Vierfontein SP Percent bonded Bonds per sales Investment 15% Rammulotsi SP Churn Repeat sales Activity 10% Viljoenskroon SP as a percent of total properties New Properties New properties Growth 10% added to the registry

Moqhaka NU

Steenwerp Presidentia

Gelukwaarts Kroonstad SH Constantia Brentpark Wilgenhof Suidrand

Matlwangtlwang SP

Steynsrus SP

Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry.

Total Residential properties Housing Performance Profile 0 Growing 1 000 Stable 2 000 Slow 3 000 Null ≥ 4 000 11

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Housing Performance Index Trends Moqhaka, performance over time relative to the metro, 2007 -2013 6,5 6,5 8,0 Brentpark 5,5

2,5 2,5 6,5 4,0 4,0 Charl Malanville Noordhoek 3,5 1,5 2,5 2,5 0,0 2,5 2,5 2,5 3,5 9,0 9,0 6,5 Constantia 6,0 6,5 6,0 Panorama 4,0 5,5 5,0 5,0 3,5 1,0 6,0 9,0 6,0 9,0 5,0 Elandia Phomolong 6,0 5,0 2,5 4,0 3,5 2,5 2,5

5,5 5,0 Elandia Prison Presidentia 5,0

1,0 2,5 3,5 6,5 5,5 6,5 Gelukwaarts 5,5 5,0 Rammulotsi SP 5,0 5,0 3,5 5,0 3,5 3,5 3,5 6,5 6,5 4,0 4,0 Goedgedacht 6,5 1,5 Seisoville 2,5 4,0 0,0 2,5 2,5 0,0 6,5 7,5 7,5 Gunhill 2,5 Steenwerp 3,5 2,5 0,0 4,0 2,5 2,5 3,5 2,5 9,0 9,0 Heuwelsig Steynsrus SP 5,0 2,5 3,5 2,5 6,5 6,5 4,0 5,0 5,0 Kroonheuwel Suidrand 5,0 1,0 1,0 3,5 1,0 1,0 0,0 6,0 Kroonstad 5,0 Central The Meadows SH 2,0 2,5 2,5 1,0 2,5 3,5 0,0 2,5 0,0 0,0

Kroonstad 3,5 5,0 5,0 2,5 Tuinhof Industrial 1,0 1,0 4,0 1,0 3,5 1,5 0,0 3,5 6,5 7,5 5,0 5,0 Kroonstad SH 5,0 4,0 3,5 Uitsig 3,5 2,5 1,0 0,0 3,5 9,0 Kroonstad SP1 4,0 4,0 Vierfontein SP 4,0 0,0 3,5

4,0 6,5 5,0 Maokeng SP Viljoenskroon SP 5,0 1,5 2,5 2,5 2,5 2,5 2,5 2,5 0,0 6,0 Marabastad Wespark 2,5 5,0 4,0 1,0 1,0 0,0 3,0 6,5 Matlwangtlwang 3,5 3,5 6,5 5,0 SP Wilgenhof 4,0 2,5 2,5 2,5 2,5 3,5 3,5 2008 2009 2010 2011 2012 2013 6,5 4,0 5,0 Moqhaka NU Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry. 2,5 0,0 3,0 Growth Profile Growing 5,0 Stable Morewag 5,0 3,5 1,0 Slow 4,0 1,0 Null 6,5

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 8.4 Performance Over Time

These charts provide the Housing Performance Index by suburb over time using the six key indicators (price and value appreciation, sales and bonded sales, churn and new properties). Growth is relative to the municipality (and change from the preceding year), so it is important to compare these lines to the area’s overall performance, and the direction in which the trends are headed. The city’s growth overall (below) is in the top six growth markets for mining towns and appears to be on a stable upward trend, as compared to the province.

Moqhaka’s housing market appears to be recovering from a decline. In considering development investment over the long term, stability of growth is often a more important consideration when projecting future performance than high growth. Building housing opportunities between areas of high and low growth can better integrate housing markets overall. This information can help advise how to create a more cohesive and stable housing continuum, with fewer spikes and drops, and where to begin.

Areas with no data have no residential properties or sales transactions, such as farms or open space, mines or industrial uses like power generation.

Housing Performance Index Trend Moqhaka, 2008 - 2013. 7,5

4,0 Moqhaka

2008 2009 2010 2011 2012 2013 Year Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds reg-

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Key Performance Indicators 8.5 Housing Performance Moqhaka, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index Indicators R 400K R 386K R 400K

R 321K Six indicators – price and value

R 300K R 300K nge)

(blue) appreciation (top orange and blue lines), R 253K R 200K R 200K

Price (ora rty Value rty total sales and bonded sales (middle R 198K green bars and brown line), change in

R 100K R 100K vg Sale

Avg PropeAvg new properties and churn (bottom red

R 0K R 0K and blue lines) – are the most telling 600 600 544 ) of growing, active housing property les markets. The relationship between 385 383 les les (green 400 366 400 indicators provides clues as to what 330 dential Sa 304

qhaka may be driving performance, what that 56%

(brown)

dential Sa ded ded Resi might mean for future development 200 200 55% 50% 56% 48% potential and how it might affect or be 43%

Total Total Resi Total Total Bon influenced by different housing types, 0 0 2,8% prices or target incomes. ) 2,5%

2,3% 2% 2%

erties (red erties These charts compare the performance 1,7% e)

1,7%1,4% 1,6% 1,7% of three ownership types, namely 1,4%

hurn (blu

New Prop 1,3% freehold, sectional title and estate

0,9% C 1% 1% ownership. The housing market in 0,3%

Change inChange Moqhaka is dominated by freehold 0% 0% 2008 2009 2010 2011 2012 2013 properties. Overall properties have Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflect- been selling above their values, ed on the deeds registry.

Key Indicators suggesting active lender and buyer Avg Property Value interest in the area. This may also Avg Sales Price Total Residential Sales be the result of lower cost housing Total Bonded Residential Sales Change in New Properties bringing the average value down. Churn Overall the number of sales (green Key Performance Indicators bar) have fluctuated steadily since Moqhaka, Freehold properties, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index 2009, and bonded sales (brown R 400K R 400K R 384K line) have dropped by almost 10%.

R 300K R 322K R 300K e e (blue) R 247K (orange) Housing markets are very sensitive to R 200K R 191K R 200K access to credit, so lending information

perty Valu perty ale ale Price will be helpful in understanding this R 100K R 100K

Avg S Avg Avg ProAvg more closely (see Lending below). R 0K R 0K Churn rates have steadily increased 500 475 500 n) (blue line), indicating higher turnover

400 400 l Sales 345 of existing homes over time. 329 344

ales ales (gree

287 n)

aka 300 300

264 esidentia 59%

(brow Moqh 200 200

sidential S 51% 58%

59% 49% R Bonded 100 47% 100

Total Total Re

Total Total 0 0 3% 3% 3%

ed) 2%

2,2% 2% 2% 2%

operties (r operties

1% (blue) 1,6% 1,5% 1,6% 1,3% 1,2% 1% Churn in New Pr 1% 1%

Change Change 0% 0% 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflected on the deeds registry.

Key Indicators Avg Property Value Avg Sales Price Total Residential Sales Total Bonded Residential Sales Change in New Properties Churn

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Key Performance Indicators 8.6 Housing Performance Moqhaka, Sectional Title properties, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index Indicators by Property Type R 400K R 392K R 400K R 343K R 395K Different housing markets perform in

R 300K R 300K nge) R 301K ue ue (blue) different ways, including freehold (free-

R 200K R 200K Price (ora standing) homes and sectional title

operty Val operty (subunits within a single property). The

R 100K R 100K vg Sale

Avg PrAvg area is predominantly freehold (see

R 0K R 0K Market Size below), with only a few 66 places throughout the municipality having

les

en) 60 60 sectional title properties and only a small

43 ential Sa number having estate properties. Overall, Sales (gre 40 39 38 38 40 34 sectional title sales prices have been

(brown)

Moqhaka ded ded Resid parallel, and sometimes identical. Market esidential 39% 20 20 40% activity decreased significantly in 2009 in

39% otal Bon

Total Total R 34% 32% T 0 21% 0 terms of sales, lending and rates of new 4,3% 4,5% 4,4% properties added to the registry (red line). 4% 3,8% 4% (red) 3,6% 3,7% 4%

3% 3% e) Estate properties sold at least R500 000

roperties roperties

2% 2% below their value until 2011, there were

hurn (blu

in New P no transactions thereafter. The one 1% 1% transaction that occurred in 2013 was

Change 0% 0% 0% 0% 0% 0% 0% about R70 000 above the property value. 2008 2009 2010 2011 2012 2013 It appears that there have not been any Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflected on the deeds registry. new estate properties and that all the Key Indicators Avg Property Value transactions that occurred were resales of Avg Sales Price existing properties. Total Residential Sales Total Bonded Residential Sales Change in New Properties Churn Estate properties have consistently experienced the least amount of market activity. Key Performance Indicators Moqhaka, Estate properties, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index Lending is instrumental in the growth R 800K R 850K R 800K R 776K of housing markets, and the ability to

R 600K R 616K R 600K access bonds to buy sectional title houses

alue alue (blu R 569K

ce (orang ce has driven the growth of this housing R 400K R 400K type. Sectional title is also an important

Sale Pri Property V Property affordable homeownership option.

R 200K R 200K Avg

Avg

R 0K R 0K 4 4

3 3 3 3

(green)

ial Sales 2 a 2 2

own)

tial Sales 1 1 Resident

(br

Moqhak 1 1

l Residen 0 0 l Bonded 0% 0% 0% 0% 0%

Tota

Tota -1 -1

12,0% 10% 10%

es (red) es

8,0% 8,0%

Properti 5% 5% rn (blue)

Chu 4,0% 4,0%

nge nge in New

Cha 0% 0% 0% 0% 0% 0% 0% 0% 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflected on the deeds registry.

Key Indicators Avg Property Value Avg Sales Price Total Residential Sales Total Bonded Residential Sales Change in New Properties Churn 15

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 9. Market Size

9.1 Market Size: Key Findings

Moqhaka’s housing market is essentially three markets: Government-sponsored housing built as part of the national Housing Initiative over the past 20 years, privately traded and financed homes, and informal settlements. Markets are generally closely clustered with lower-priced, actively selling private growing markets near the city centre, and middle income, non-bonded Government-sponsored developments and informal settlements (not on the deeds registry).

The implied demand for housing is high, highlighted by the high number of informal settlements. Demand creates opportunities for new housing supply to be positioned between the existing segregated markets to better integrate the town’s spatial, income and housing markets. The current proximity of Government-sponsored housing to the informal settlements creates opportunity for Government to eradicate the informal settlements by expanding their investment within the same proximity. 9.2 Policy Implications

Government can use this existing investment to identify areas of future development and entice private sector participation. Existing Government investment in housing can be leveraged to guide new development opportunities, if and when those homes can be sold to new buyers and the proceeds used to purchase new housing further up the housing continuum. For example, Government might prioritise new development between Government-dominated and private markets for more integration mixed-income sites, and fills spatial gaps within the town.

Encouraging the expansion of financing to lower income families will allow for those homes to be sold, and the proceeds used to support housing development further up the housing continuum.

9.3 Quick Definitions:

Market Size: the total number and distribution of important aspects of areas, including average home prices; home values; total households in order to inform the potential scale of housing intervention strategies; and the impact of proposed development schemes. Property Value Segment: in order to better understand the performance of housing markets, data has been grouped into four property value bands: properties valued under R250 000; between R250 000 and R500 000; between R500 000 and R1.2 million and over R1.2 million. This helps one to understand the various trends and strengths inherent in each segment, and to see how properties are integrating across the housing continuum, especially over time. Government-sponsored Housing: housing which was created through some Government intervention, from site and infrastructure provision, direct construction or finance, such as Site & Service, RDP and BNG. While these homes are not recorded as such on the deeds registry, their presence is estimated based on surrounding registrations, timing, prices and volume of activity. Freehold / Full Title: a permanent and absolute tenure of land or property by a person or entity (such as a corporation or trust) with freedom to dispose of it at will. Freehold or full title describes the assumption of full ownership rights when one owns a property, often including the building and the land it is built on. Sectional Title: separate ownership of units or sections within a complex or development. These are often comprised of mini subtype houses, semi-detached houses, townhouses, flats or apartments and duet houses. These are governed by the Sectional Titles Act and managed by a body corporate comprised of elected representatives of the sectional title owners in the development. Absorption: the pace with which homes to be developed might be sold in a specific market during a given period of time. This can be calculated by dividing the total number of available homes coming on line by the estimated number of sales per month, often based on the rate of sales nearby. Households to Properties Ratio: the total number of households (as reported by the census) divided by the total number of residential properties on the deeds registry. This is a quick, easy relative indicator of household density and formality of a suburb as compared to other areas.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 9.4 Market Size and Government Investment in Housing

Market size measures the distribution of home prices, households and values in order to inform the potential scale of housing intervention strategies, and the impact of proposed developments on the surrounding area. It can also show the impact of Government investment in housing markets. Comparing the distribution of values to the housing performance map, several moderate income areas are growing faster than the municipality.

In Moqhaka, both formal and informal properties of several values are concentrated towards the centre of the municipality, considerably far away from mines. The location of these properties coincides with the location of the highest concentration of Government investment in housing (map two).

It is a very positive fact that so many Government-sponsored housing units are on the deeds registry. However, often these homes are undervalued for two reasons. The subsidy value was often noted as the sales price (rather than the cost), or sales prices are driven low because buyers lack access to credit with which to purchase the homes at a more realistic sales price, and must pay with the cash they have.

Encouraging the resale of Government-sponsored housing is an important means of expanding housing options – for the sellers, who can move up the ladder with the equity from the sale of their property, to the first time homebuyer purchasing the existing home. More activity in these markets will also raise the value of the home, often a family’s most valuable asset.

Number and Percent Government Sponsored Residential Properties Moqhaka, by total residential properties per suburb, 2013

Vierfontein SP

Rammulotsi SP Distribution of Properties and Values by Suburb

Viljoenskroon SP Moqhaka, 2013 Formal residential properties, informal settlements and mines, by suburb

Vierfontein SP

Moqhaka NU Viljoenskroon SP

Steenwerp Elandia

Gelukwaarts Kroonstad SH Panorama Brentpark Suidrand

Moqhaka NU

Kroonstad SH Maokeng SP Kroonheuwel Gelukwaarts Kroonstad Industrial Wilgenhof Kroonstad Central

Matlwangtlwang SP

Suidrand Steynsrus SP Gunhill

Matlwangtlwang SP Steynsrus SP

Source: South African deeds registry via Lightstone (Pty), Ltd; Housing Development Agency informal Source: South African Deeds Registry via Lightstone (Pty) Ltd. All indicators reflect formal market data as reflected on the deeds registry. settlements and mines. Total Residential properties % Govt Sponsored Number of Residential properties Type Affordability 0 1 000 0% 100% 0 15 000 Informal Settlement Under R250k 2 000 5 000 Mines Between R250k - R500k 3 000 10 000 Between R500k - R1.2m ≥ 4 000 Over R1.2m

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Market Size: Total Properties by Property Value Segment 9.5 Market Size by Value Moqhaka, 2013 Sorted by suburb, by property value Segment Rammulotsi SP 4 006 Steenwerp 3 634 These charts provide the proportion Constantia 664 1 462 of properties within each suburb Gelukwaarts 662 995 by property value segment (below Matlwangtlwang SP 963 R250 000; between R250 000 – Seisoville 608 R500 000 and over R500 000). Almost Maokeng SP 762 half (i.e 48%) of Moqhaka’s residential Viljoenskroon SP 340 277 111 properties are government sponsored Phomolong 119 600 units. Moqhaka has a mixed range of Kroonstad Central 299 property values in several suburbs, with Brentpark 242 439 only a few suburbs hosting only one Morewag 566 90 range of property values. This may help Suidrand 419 109 to explain the area’s growing-market. Kroonheuwel 403 132 Vierfontein SP 285 118 In small housing markets, Government Elandia 381 interventions and programmes must Steynsrus SP 215 133 be more specific as their impact on the Wespark 254 73 market overall will be greater. Moqhaka NU 273 Noordhoek 137 A diverse approach may help to expand

Panorama 211 the diversity and distribution of housing Kroonstad SH 188 options across town. Wilgenhof 199 Tuinhof 145 . Marabastad 143

Uitsig 133 Kroonstad Industrial 100 Goedgedacht 96 Presidentia 91 Charl Malanville 86 Gunhill 4 The Meadows SH 4 Elandia Prison 0 Heuwelsig 0

Kroonstad SP1 0 0 500 1000 1500 2000 2500 3000 3500 4000 Total Residential Properties Source: SA Deeds data, via Lightstone (pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. Property Value Segment Under R250k Between R250k - R500k Between R500k - R1.2M Over R1.2M

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 9.6 Market Size by Property Type

Moqhaka’s residential properties are predominantly freehold, with only a few subplaces having sectional title properties and only one having estate properties.

Market Size: Total Properties by Property Type Moqhaka, 2013 Distribution of Property types Freehold, Sectional Title and Estate properties Moqhaka, by total residential properties per suburb, 2013 Rammulotsi SP 4 012

Steenwerp 3 634

Constantia 2 131

Gelukwaarts 1 661 Vierfontein SP Matlwangtlwang SP 964 Vierfontein SP Seisoville 791

Maokeng SP 762 Viljoenskroon SP

Viljoenskroon SP 61 675

Phomolong 721 Viljoenskroon SP

Kroonstad Central 271 426

Brentpark 683

Morewag 55 601

Suidrand 34 506

Kroonheuwel 45 491 Moqhaka NU Vierfontein SP 228 176

Elandia 347 Moqhaka NU Steynsrus SP 360

Wespark 313 Morewag Elandia Prison Moqhaka NU 287 Kroonstad Industrial

Noordhoek 211 Morewag Kroonstad Industrial Panorama 201

Kroonstad SH 212 Wilgenhof 217

Tuinhof 156

Marabastad 143

Uitsig 120

Kroonstad Industrial 111 Matlwangtlwang SP Goedgedacht 96

Presidentia 92

Charl Malanville 88

Gunhill 6 The Meadows SH 4

Elandia Prison 0

Heuwelsig 0 Source: South African Deeds Registry via Lightstone (Pty) Ltd. All indicators reflect formal market data as reflected on the deeds registry. Kroonstad SP1 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 4000 Total Residential properties Property Type Description Total Residential Properties 0 Estate Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. 1 000 Freehold Property Type Description 2 000 Sectional Title Freehold Estate 3 000 Sectional Title ≥ 4 000

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Market Size: Households, Properties and Income 9.7 Market Size by Moqhaka, 2013 Total households, renting, total properties, household to property ratio and average monthly income by suburb Households and Income Households Renting (Grey) 0K 2K 4K 6K 8K 10K Understanding the distribution of 19% Rammulotsi SP 7 598 4 012 1,9 R 3,4K households and incomes within 25% Steenwerp 6 603 3 634 1,8 R 4,3K Moqhaka helps to inform scale, 30% Moqhaka NU 4 679 295 15,9 R 6,2K development impact and programme 18% Constantia 4 369 2 131 2,1 R 5,2K targets. 16% Gelukwaarts 3 441 1 661 2,1 R 5,9K 35% Phomolong 2 786 721 3,9 R 3,8K Census data is useful as the only 44% Seisoville 2 425 791 3,1 R 3,6K source of demographic information 25% Matlwangtlwang SP 2 181 964 2,3 R 2,3K consistently available at the suburb 49% Marabastad 1 839 143 12,9 R 3,0K level, and provides interesting insights 23% Brentpark 1 045 683 1,5 R 7,1K into local differences. 77% Kroonstad Central 889 697 1,3 R 16,0K 13% Maokeng SP 844 762 1,1 R 3,3K Of the 22 mining towns, areas with 31% Morewag 832 656 1,3 R 13,9K high levels of renters (grey bars) 35% Viljoenskroon SP 699 736 0,9 R 14,2K also very often have the highest 41% Kroonheuwel 618 536 1,2 R 15,5K household incomes, however, 26% Suidrand 524 540 1,0 R 22,5K the inverse is true for Moqhaka. All 24% Kroonstad SH 474 221 2,1 R 12,3K subplaces with average incomes that 22% Elandia 432 388 1,1 R 24,1K are above R20 000 also have rental 19% Wespark 413 329 1,3 R 19,1K percentages which are below 30%, 35% Vierfontein SP 371 404 0,9 R 5,5K except Elandia Prison, which has an 69% Charl Malanville 262 88 3,0 R 6,8K average rental of 99% and average 15% Panorama 246 235 1,0 R 25,4K income of R35 500 – this may be 21% Noordhoek 239 247 1,0 R 9,9K rental housing which is available to 19% Wilgenhof 237 217 1,1 R 35,2K employees of the prison (or perhaps 27% Steynsrus SP 229 360 0,6 R 12,4K the incarcerated population). It is 36% The Meadows SH 211 4 52,8 R 9,8K suggested that these high levels of 99% Elandia Prison 188 0 R 35,5K renters might be the combination of 31% Uitsig 163 140 1,2 R 28,0K mining executives who rent (instead of 11% own), as well as support staff who rent Kroonstad Industrial 114 118 1,0 R 2,1K 9% nearby in backyard accommodation. Tuinhof 112 156 0,7 R 26,9K 13% While rental generates important Presidentia 108 92 1,2 R 22,4K 34% income to the owners, the creation of Goedgedacht 90 96 0,9 R 11,7K 0% quality, affordable rental housing in Kroonstad SP1 13 0 R 2,7K 100% those areas can help to address some Gunhill 4 6 0,7 R 10,1K of the housing backlog quickly. Heuwelsig 0 0 R 0,0K 0K 2K 4K 6K 8K 10K 0K 2K 4K 0 20 40 60 R 20,0K R 40,0K

Total Households Total Residential Properties HHs to Properties Ratio Avg monthly HH income Areas with above average renters and moderate incomes (green bar) (such as Source: Stats SA Census 2011 (with CPI increase); South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. Charl Malanville and Gunville) might mean families which are ready for more formal rental options.

Ratios of households (from StatsSA) to properties (from the deeds registry) - the red bar- can show degrees of limited supply or informality. The informal settlements, such as The Meadows SH, have high populations, low formal properties, few registered properties and low incomes.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 10. Market Activity

10.1 Key Findings

Sales activity is evident in several subplaces throughout the municipality, however the properties that are being transacted are selling considerably below their values. Sales dropped across the country after 2008, and in Moqhaka they have fluctuated steadily.

Bonded sales in lower markets are an extremely small portion of the bonded market. Sales continue to be dominated by repeat sales, with few new housing sales. Property value (the home’s worth) and sales prices are closely related in active markets. In less active markets, sales prices are less than their suggested value.

10.2 Policy Implications

Focus on increasing access to lending, determining what barriers exist to make credit more accessible, either through lower cost products, more flexible terms, and/or inclusion of existing debt into a mortgage loan product. These products should be tailored to meet the needs of the lower income markets.

Create financing products which can bring down the cost of quality rental housing as an affordable alternative to homeownership for lower income families.

10.3 Quick Definitions:

Market Activity: performance of key housing property market indicators over time, such as sales, bonds, registrations and churn.

Market Share: the proportionate share of the market according to certain indicators, such as loans, types of properties, or property values.

Property Value Segment: in order to better understand the performance of housing markets, data has been aggregated into four property value bands: properties valued under R250 000; between R250 000 and R500 000; between R500 000 and R1.2 million and over R1.2 million. This helps one to understand the various trends and strengths within each segment, and to see how properties are integrating across the housing continuum, especially over time.

Bonded Sale: a transfer of deed on the deeds registry with an associated bond from a lender, including the property as collateral for the bond.

New Sale / New Registration: the appearance of a residential property on the deeds registry for the first time. It might include new construction or previously existing units being recorded for the first time (such as previously built RDP homes).

Resale / Repeat Sales: the sale or transaction of a property which has existed on the deeds registry before (as opposed to a new sale or new registration).

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 10.4 Sales and Bonded Sales by Property Value Segments

In 2008, just over 50% of all residential sales and almost 70% of bonded sales in Moqhaka were over R500 000 (the red and orange sections). In contrast, just under 50% of all residential sales, and roughly 30% of bonded sales were under R500 000 in 2008 (the blue and green section). While sales in the proportion of lower segments increased slightly in 2013, the share of bonds declined after a slight increase in 2011. Properties under R250 000 represented 16% of all sales in 2013, but only 5% of the bonded sales.

The relationship between sales and bonded sales shows that sales in the lower segments have consistently lower proportions of bonds than their proportion of sales. This highlights the importance of access to credit to growing housing markets, in particular the lower valued segments. The share of bonded sales under R500 000 has fluctuated over time, but still takes up the lowest share of the lending market.

This might be due to credit indebtedness, which disproportionately impacts lower income borrowers, or lack of access to affordable homes with which to buy. Policies that help expand access to credit and provide more housing opportunities under R500 000, in the lower bands, can expand sales within that band. Rental housing might also be a more suitable option.

Total Sales by Property Value Segment Total Bonded Sales by Property Value Segment Moqhaka, 2008 - 2013 Moqhaka, 2008 - 2013 All residential sales All residential sales 600 600

500 16% 500

400 400

30% Sales 13%

Sales 16%

14% ntial

ntial 13% 300 side 300 15% 27% 6% eside 27% 30%

ed ed Re 26%

talR 32%

ond

To 32% 200 200 otal B otal 4% 7% T 7% 51% 5% 28% 25% 27% 27% 58% 55% 9% 100 52% 52% 62% 51% 100 28% 62% 66% 60% 65% 59% 0 4% 2% 2% 4% 3% 1% 2008 2009 2010 2011 2012 2013 0 7% 4% 3% 6% 6% 3% Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators 2008 2009 2010 2011 2012 2013 reflect formal market data as reflected on the deeds registry. Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. Property Value Segment Under R250k Property Value Segment Between R250k - R500k Under R250k Between R500k - R1.2M Between R250k - R500k Over R1.2M Between R500k - R1.2M Over R1.2M

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Percent of Sales Bonded by Value Segment 10.5 Lending per Property Moqhaka, All residential sales, 2008 - 2013 Value Segments

100% 95% 100% This chart shows (by contrast to the previous charts) the percent of bonded 90% sales within the various property value segments. The relatively few formal 80% bonded sales in the town make the trend lines more dramatic. 70% 68%

ed Overall, the total sales receiving 60% bonds in Moqhaka has decreased s Bonds 59% since 2008, except for the highest 50% 48% value segment (red line) which has of Sale of increased to 100%. Interestingly, the

rcent rcent 40% 42% highest drop in bonded sales has been in Pe the R500 000 to R1.2million (orange line) value segment, perhaps due to decreased 30% supply of housing that falls within this segment, or decreased access to credit. 20% 20% 16% Mid-range and upper tiered 10% properties sales experienced relatively fluctuating activity since 0% 2008 2009 2010 2011 2012 2013 2009. Year

Market Segment Under R250K Betw R250K- R500K Betw R500K - R1.2M Over R1.2M

Sales by Property Value Segments 10.6 Sales by Property Value Moqhaka, by suburb, 2013 Segments

This map shows the volume of sales activity (the size of the dot) by Moqhaka NU suburb across the town by property value segment (the slices of the pie).

The midrange properties (the orange segments) saw most activity, with the lower priced homes (green) having a smaller portion of the sales activity. This may be a potential sign of active (increased) supply and steady demand for The Meadows SH the middle market. This map reveals that Elandia Prison Steenwerp Presidentia sales activity in the municipality is split, Gelukwaarts Constantia Marabastad Kroonstad SH Uitsig with sales in the lower segment to the Maokeng SP Charl Malanville Kroonstad SP1 west and the mid segment to the east. Kroonstad Industrial Goedgedacht Wilgenhof Access to credit is a significant boost or barrier to housing market growth. While some suburbs offer a range of housing

Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. price options; pinpointing product prices Total Residential Sales Property Value Segment and types to specific areas, especially 0 Under R250k 10 Between R250k - R500k considering local affordability; is key to 20 Between R500k - R1.2m 30 Over R1.2m ensuring programme success. 36

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Total Sales by Sales Type 10.7 Sales by New and Moqhaka, 2013 Repeat Sales New and repeat sales 7 Brentpark 0 An important distinction in market 3 Charl Malanville performance is the sale of new homes 0 27 (which have never appeared on the Constantia 2 deeds registry) and the resale of existing 21 Elandia 0 homes. The chart shows new (green) Elandia Prison and repeat sales (orange) by suburb. In most mining towns, new registrations 11 Gelukwaarts 1 are clustered in only a few suburbs. 3 Goedgedacht Moqhaka appears to have new sales 0 in several subplaces throughout the Gunhill municipality, although these sales are Heuwelsig significantly small. 35 Kroonheuwel 0 35 New sales can also show the recent Kroonstad Central 1 registration of government-sponsored 1 Kroonstad Industrial housing investment. An important 1 10 point is to recognise the impact Kroonstad SH 1 of newly registered Government Kroonstad SP1 investment in housing. Often these 5 Maokeng SP registrations may be perceived as a 0 market distortion, but the deeds issued Marabastad on Government-sponsored housing 2 Matlwangtlwang SP 0 represent real assets which now can be 7 Moqhaka NU traded and loaned against, and are key 1 to moving up the housing ladder. Thus, 28 Morewag 0 the housing market has in fact grown. 11 Noordhoek 0 8 Suburbs with no data reﬂect areas with no Panorama 1 sales or new registrations. 5 Phomolong 1 3 Presidentia 0 2 Rammulotsi SP 0 6 Seisoville 0 10 Steenwerp 0 8 Steynsrus SP 0 28 Suidrand 0 The Meadows SH

5 Tuinhof 0 7 Uitsig 0 23 Vierfontein SP 2 25 Viljoenskroon SP 1 21 Wespark 0 14 Wilgenhof 0 0 20 Total Residential Sales Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry.

Measure Names Total Repeat Sales Total New Sales

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 10.8 Market Activity Amongst New and Repeat Sales

In Moqhaka, several subplaces have experienced large volumes of activity, such as Morewag, Viljoenskroon, Kroonheuwel and Kroonstad Central. The growth and maturity of an area’s housing market can often be detected by comparing the interaction between new and resale market transactions over time. The growth of existing home sales (the orange line) indicates sustained interest of housing markets by borrowers and lenders.

Often volumes of new homes in prior years become resales in later years. Understanding how mining companies create new units helps to understand their existing and potential contribution to expanding the local housing economy.

Sales Trends by Sales Type 5 Moqhaka, 2008 - 2013 3 New and Repeat Sales Maokeng SP 2 6 6 7 0 02 4 0 0 Brentpark 4 2 3 0 0 0 0 0 Marabastad

5 7

Charl Malanville 4 3 02 0 0 0 2 0 1 0 Matlwangtlwang SP 1 21 27 18 0 0 18 Constantia 8 13 13 9 0 0 0 0 7 2 2 Moqhaka NU 3 29 21 21 4 3 0 0 0 21 2 1 Elandia 1 10 17 43 3 1 2 08 0 42 28 Morewag 29 23 26 0 0 0 0 1 Elandia Prison 0 11 10 10 7 8 32 Noordhoek 7 19 0 0 0 0 Gelukwaarts 0 0 16 11 24 2 13 1 11 1 0 21 2 1 3 3 Panorama 3 8 12 11 1 0 0 0 2 Goedgedacht 2 5 1 1 1 6 5 0 0 0 0 0 5 5 Phomolong 3 1 1 0 1 Gunhill 0 0 0 0

5 4 4 3 3 Presidentia

0 0 0 0 Heuwelsig 0 1 0

4 38 3 Rammulotsi SP 1 2 34 46 35 0 1 Kroonheuwel 34 1 0 28 3 0 0 1 0 1 6 6 0 0 4 54 40 Seisoville 35 33 1 3 Kroonstad Central 0 0 0 349 34 3 0 0 13 0 231 19 1

10 4 Steenwerp 2 4 3 5 1 Kroonstad Industrial 2 1 1 0 1 6 1 3 4 0 1 19 0 0 0 14 23 15 Steynsrus SP 12 12 12 8 Kroonstad SH 16 13 10 0 0 0 0 11 1 0 0 0 0 0 0 1 35 41 26 28 Suidrand 30 1 Kroonstad SP1 8 180 0 0 0

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 10.9 Total Sales by Property Value, Change From The Prior Year

This chart shows the change in activity for property sales (first two columns) and bonded property sales (third and fourth columns) from 2012 to 2013. It is possible to see important market shifts by comparing the change in activity within particular property markets from one year to the next.

Several subplaces have experienced an increase in both sales and bonds from 2012 to 2013. It is important to note that several suburbs experienced significant increases in residential sales in the under R250 000 value segment, however there was only one suburb with increased bonds associated with this market segment. In 2013, this market segment grew without the support of credit.

Suburbs with no information had no residential sales transactions in the past two years.

Market Activity: Total Sales and Change in Sales Moqhaka, 2012 - 2013 Change in residential and bonded sales Brentpark 3 4 100% 1 -100% Charl Malanville 3 -57% 2 -50% Constantia 17 12 240% 4 6

Elandia 21 11% 15 50% Gelukwaarts 7 5 3 5 Goedgedacht 3 0% 3 0% Kroonheuwel 26 9 15 7

Kroonstad Central 2 1 13 20 -50%-50%117% 67% 311 6 -50%-50% Kroonstad Industrial 2

Kroonstad SH 1 10 -67% 1 7 -67%

Maokeng SP 5 150% 0 Matlwangtlwang SP 11 0%

Moqhaka NU 8 100% 0 -100%

Morewag 23 5 67% 12 2 Noordhoek 2 9 50% 2 5 Panorama 9 350% 4 300%

Phomolong 4 2 100% 1

Presidentia 3 -25% 3 0% Rammulotsi SP 2 0% 0

Seisoville 6 200% 0

Steenwerp 10 43% 1 Steynsrus SP 521 -55% 21 -100%

Suidrand 1 25 2 -60% 1 17 -100% Tuinhof 4 1 1 -100%

Uitsig 7 0% 5 25% Vierfontein SP 11 23 31 50%

Viljoenskroon SP 1 13 12 200% 9 7 133% Wespark 18 3 -50% 16 2 78% Wilgenhof 2 12 33% 2 5 -29% 0 5 10 15 20 25 30 35 -100% 0% 100% 200% 300% 0 5 10 15 20 -100% 0% 100% 200% 300% Total Residential Sales Change in Residential Sales Total Bonded Residential Sales Change in Bonded Residential Sales

Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. Property Value Segment Between R250k - R500k Between R500k - R1.2M Over R1.2M Under R250k

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Market Activity: Total Sales and Change from previous year 10.10 Change in New and Moqhaka, 2012 - 2013 Change in new and repeat sales Repeat Sales

Brentpark 7 17% 0

Charl Malanville 3 -57% 0 This chart shows the specific rate of activity of new and repeat sales Constantia 27 108% 2 from 2012 to 2013. As seen before, Elandia 21 24% 0 -100% the Moqhaka market is dominated by Elandia Prison resales. While there are a few new sales Gelukwaarts 11 -15% 1 throughout the municipality, no suburb Goedgedacht 3 0% 0 has an increase of new sales in 2013.

Gunhill

Heuwelsig Many developments built by the

Kroonheuwel 35 -8% 0 -100% Government are heading into their 8th year, and become eligible for resale by Kroonstad Central 35 52% 1 0% their owners. By understanding when Kroonstad Industrial 1 1 those units come Online for resale, Kroonstad SH 10 -17% 1 Government can align policies, which Kroonstad SP1 encourage the sale and development Maokeng SP 5 150% 0 nearby, that can help leverage that Marabastad prior investment, expand housing

Matlwangtlwang SP 2 100% 0 options and stimulate movement

Moqhaka NU 7 75% 1 up the next rung up the housing ladder. Resales are an important Morewag 28 8% 0 means of recycling existing homes to Noordhoek 11 10% 0 make available more housing options. Panorama 8 60% 1 Phomolong 5 0% 1 Suburbs with no information had no Presidentia 3 -25% 0 residential sales in the past two years.

Rammulotsi SP 2 -33% 0

Seisoville 6 100% 0

Steenwerp 10 67% 0 -100%

Steynsrus SP 8 -43% 0

Suidrand 28 -7% 0

The Meadows SH

Tuinhof 5 0% 0 -100%

Uitsig 7 0% 0

Vierfontein SP 23 77% 2 -67%

Viljoenskroon SP 25 25% 1 -50%

Wespark 21 40% 0 -100%

Wilgenhof 14 56% 0

0 10 20 30 40 -100% 0% 100% 200% 0 1 2 3 -100%-50% 0% Total Repeat Sales Change in Repeat Sales Total New Sales Change in New Sales

Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 10.11 Average Property Values and Sales Price

The relationship between local sales prices (orange lines) and average property values (blue lines) can tell much about the activity and integration of supply and demand. Every house in a suburb has a value, determined by the number of sales, changes in prices, churn (repeat sales) and other factors present in a robust housing market. Only houses which have sold have sales prices, but this lowers the value of homes in markets with fewer sales.

As markets formalise and strengthen, these trends inform each other more effectively, and the trend lines become almost parallel over time (such as Goedgedacht, Kroonheuwel, Morewag and Suidrand). Almost all the subplaces in the municipality have consistently sold below their value, with the rest fluctuating.

Sales prices in affordable areas more often reflect available access to credit, rather than levels of interest in the neighbourhood. Values on the deeds registry of these properties often reflect the subsidy amount, lowering the value.

Market Activity: Average Property Values and Sales Prices R 668K Moqhaka, 2007 - 2013 R 524K Property value and sales price by suburb Moqhaka NU R 177K R 184K R 151K R 151K R 116K R 539K Brentpark R 425K R 403K R 63K R 341K Morewag

R 339K R 265K R 400K R 214K R 220K R 360K Charl Malanville R 316K R 262K Noordhoek

R 186K R 166K R 133132K R 948K Constantia R 738817K R 825K Panorama

R 765K R 184K R 597K R 655K R 131K R 143K Elandia R 450K Phomolong R 80K

R 742K R 593574K R 728K Elandia Prison Presidentia

R 100K R 212K R 96K R 198K R 66K R 153K Rammulotsi SP Gelukwaarts R 127K R 30K

R 166K R 530K R 120K R 126K R 414K Seisoville R 86K R 352K Goedgedacht R 215K R 77K R 456K R 465K R 56K Steenwerp R 48K R 336K Gunhill R 313K

R 221K R 198K Steynsrus SP R 129K Heuwelsig R 604K R 473K R 572K R 452K R 558K Suidrand R 439K R 382K R 423K Kroonheuwel R 229K R 200K R 176K The Meadows SH R 611K R 492K R 386K Kroonstad Central R 351K R 509K R 397K R 339K Tuinhof R 170K

R 554K Kroonstad Industrial R 248K R 536K R 205K R 440442K R 138K Uitsig R 68K R 704779K R 506548K R 288K Kroonstad SH R 222K R 241K R 192K Vierfontein SP

R 407436K Kroonstad SP1 R 343K Viljoenskroon SP R 276K

R 64K R 517K R 53K R 448K R 46K R 45K R 405K Maokeng SP Wespark R 281K

R 149K R 913K R 132K R 774K R 641705K Marabastad Wilgenhof

R 140K 2008 2009 2010 2011 2012 2013 R 110K Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. R 87K Matlwangtlwang SP Measure Names R 57K Avg Property Value Avg Sales Price R 668K

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 11. Lending Activity

11.1 Key Findings

Lending is moderately dispersed throughout Moqhaka by area and market segment, however bonded sales are concentrated in housing and sales over R500 000, with those loans predominantly concentrated in one central area in the municipality. The share of lending by each of the four major banks in the country increased consistently and the share of lending by Other lenders has almost doubled since 2008, perhaps reflecting increased mining activity requiring expanded staff deployment, or to make up for the lack of lending growth by the existing institutions.

11.12 Policy Implications

Policies and programmes should target expanding access to credit, including the creation of new funds, with broader investment guidelines and possibilities, and small loan programmes with which to make financing more accessible to lower income households. Loans to entice the development of more middle-market housing would create more integrated markets.

Programmes should make creative financing available for rental projects as well.

11.3 Quick Definitions:

Lending Activity: the performance of key lending indicators over time, such as bond volume, new loans and bonded sales, by lending institution.

Portfolio Size: the total number and value of loans given out by particular lending institutions in the study area.

Property Value Segment: in order to better understand the performance of housing markets, data has been aggregated into four property value bands: properties valued under R250 000; between R250 000 and R500 000; between R500 000 and R1.2 million and over R1.2 million. This helps one to understand the various trends and strengths inherent in each segment, and to see how properties are integrating across the housing continuum, especially over time.

Residential Bond: a loan made for the intention of acquiring a property, which is secured by the title to the property. These are determined by the property address and the timing with which bonds and sales transactions are recorded on the deeds registry.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report All Loans by Lender 11.4 Lending Over Time Moqhaka, 2008 - 2013 Total value of residential bonds by lender R 1 600M Loan data taken from the deeds registry

R 1 500M can provide lending activity by lender,

R 1 400M which has grown consistently in the area. By comparing the top chart (all loans held R 1 300M by each lender) and the bottom chart R 630M R 1 200M (activity by lender per year) it is possible to R 611M R 1 100M R 583M note that while the lending in the area has

R 1 000M R 563M consistently grown, the amount per year R 544M varies from lender to lender. For example, R 900M R 531M annual lending has increased incrementally R 800M R 275M among all lenders between 2008 and 2013. R 700M R 258M R 245M R 600M R 232M Of note has been the infusion of other R 223M R 214M R 200M R 500M R 193M lenders into the area, from 2008 – 2013 R 191M lending activity by other lenders has R 400M R 187M R 179M R 160M increased by 60%. R 300M R 313M R 249M R 278M R 200M R 215M R 182M R 192M These other lenders primarily include R 100M companies providing home loan benefits R 96M R 110M R 116M R 122M R 0M R 79M R 87M to their employees. This is most often 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. employer-assisted lending, primarily Banks companies providing home loan benefits to ABSA FNB their employees. The lending may reflect Nedbank increased mining activity requiring Standard Bank SA Other Lenders staff deployment in the area.

The following charts explore lending New Loans by Lender by bank and by suburb to understand Moqhaka, 2008 - 2013 Total value of residential bonds by lender specifically where bank investment has R 120M been made by suburb, and what that may mean about financing availability for R 110M various development sites and scenarios.

R 100M R 32M

R 90M

R 80M

R 20M R 23M R 18M R 70M

R 28M

R 60M R 19M R 13M R 17M R 21M R 50M R 13M R 4M R 9M R 13M R 7M

R 40M R 9M R 8M

R 30M R 33M R 18M R 35M R 34M R 24M R 20M R 29M

R 9M R 10M R 14M R 10M R 8M R 8M R 6M R 0M R 6M 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry.

Banks ABSA FNB Nedbank SBSA Other Lenders

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 11.5 New Loans by Lender

As markets shift, different lenders respond in different ways. These maps show the previous bar charts on a map. The first chart (all loans by lender) is represented on the top map. All loans made in 2013 (the second chart) is shown on the lower map. By comparing the two maps, it’s possible to see where lenders invested loans in the last year (pies in the bottom map), and how that has changed from their overall portfolio in that suburb (pies in the top map).

Non-traditional lenders, such as private equity funds and employer lenders, have more flexible regulatory environments and more creative, competitive financing tools. It will be important for Government to engage these investors to ease access to credit, lower costs of financing and share in the commitment towards growing housing markets in the mining towns.

2013 R 320,000 R 0 R 0 R 815,000 R 710,000 New Loans by Lender Panorama 2008 R 3,030,000 R 2,069,000 R 1,081,824 R 4,195,000 R 0 Moqhaka, 2008 - 2013 2009 R 969,500 R 500,000 R 1,259,913 R 2,581,000 R 900,000 The value of new bonds by lender by suburb over time 2010 R 1,770,000 R 250,000 R 0 R 540,000 R 0 Moqhaka 2011 R 4,603,000 R 1,757,500 R 190,000 R 4,477,000 R 1,250,000 Standard Other 2012 R 1,280,000 R 1,600,000 R 0 R 531,000 R 0 ABSA FNB Nedbank Bank Lenders 2013 R 835,000 R 690,000 R 0 R 700,000 R 0 Brentpark 2008 R 0 R 0 R 150,000 R 251,000 R 0 Phomolong 2008 R 0 R 0 R 0 R 332,500 R 0 2009 R 0 R 0 R 0 R 0 R 0 2009 R 0 R 0 R 0 R 90,000 R 0 2010 R 0 R 210,000 R 0 R 0 R 25,000 2010 R 0 R 0 R 0 R 50,000 R 0 2011 R 160,000 R 0 R 0 R 0 R 0 2011 R 0 R 0 R 0 R 0 R 0 2012 R 250,000 R 0 R 185,700 R 410,000 R 0 2012 R 0 R 0 R 0 R 0 R 0 2013 R 0 R 0 R 0 R 353,600 R 0 2013 R 0 R 0 R 0 R 200,000 R 0 Charl 2008 R 0 R 249,417 R 572,335 R 0 R 0 Presidentia 2008 R 0 R 130,000 R 770,000 R 450,000 R 530,000 Malanville 2009 R 0 R 0 R 0 R 245,000 R 274,980 2009 R 760,000 R 0 R 704,075 R 0 R 0 2010 R 380,000 R 0 R 0 R 396,000 R 0 2010 R 383,000 R 712,500 R 0 R 0 R 0 2011 R 0 R 0 R 0 R 0 R 0 2011 R 150,000 R 0 R 0 R 0 R 0 2012 R 450,700 R 183,750 R 0 R 280,000 R 0 2012 R 200,000 R 1,000,000 R 0 R 837,000 R 0 2013 R 0 R 0 R 0 R 476,000 R 0 2013 R 500,000 R 580,000 R 0 R 1,450,000 R 0 Constantia 2008 R 350,000 R 0 R 81,448 R 836,000 R 0 Rammulotsi SP 2008 R 380,000 R 0 R 0 R 70,000 R 20,000 2009 R 668,000 R 417,200 R 0 R 546,580 R 666,615 2009 R 0 R 0 R 0 R 0 R 0 2010 R 0 R 610,000 R 0 R 694,000 R 270,000 2010 R 0 R 0 R 0 R 0 R 0 2011 R 711,000 R 295,000 R 0 R 1,999,050 R 150,000 2011 R 0 R 0 R 0 R 0 R 0 2012 R 828,000 R 0 R 0 R 880,000 R 0 2012 R 0 R 0 R 0 R 0 R 0 2013 R 0 R 710,000 R 0 R 2,319,000 R 0 2013 R 0 R 0 R 0 R 0 R 0 Elandia 2008 R 6,995,000 R 2,270,000 R 1,273,090 R 5,180,355 R 1,395,000 Seisoville 2008 R 0 R 240,000 R 0 R 0 R 0 2009 R 1,830,000 R 0 R 589,475 R 0 R 0 2009 R 0 R 0 R 227,423 R 0 R 0 2010 R 2,125,000 R 450,000 R 470,000 R 1,250,000 R 1,200,000 2010 R 0 R 0 R 0 R 216,000 R 0 2011 R 1,119,500 R 1,390,000 R 0 R 3,800,000 R 580,000 2011 R 258,500 R 0 R 0 R 0 R 0 2012 R 1,150,000 R 720,000 R 547,000 R 3,344,000 R 0 2012 R 0 R 0 R 0 R 250,000 R 0 2013 R 3,032,000 R 1,560,500 R 2,275,700 R 2,885,000 R 0 2013 R 0 R 0 R 0 R 0 R 0 Gelukwaarts 2008 R 611,000 R 683,326 R 211,858 R 1,709,837 R 0 Steenwerp 2008 R 243,000 R 0 R 281,900 R 0 2009 R 430,500 R 455,790 R 222,018 R 230,000 R 100,082 2009 R 0 R 0 R 0 R 0 2010 R 406,500 R 435,000 R 0 R 504,900 R 363,822 2010 R 0 R 0 R 0 R 0 2011 R 325,000 R 430,000 R 0 R 3,184,600 R 0 2011 R 0 R 0 R 0 R 120,000 2012 R 0 R 413,750 R 0 R 1,723,520 R 0 2012 R 292,000 R 150,000 R 0 R 0 2013 R 250,000 R 478,000 R 0 R 1,395,400 R 0 2013 R 104,500 R 0 R 0 R 0 Goedgedacht 2008 R 0 R 0 R 0 R 0 R 0 Steynsrus SP 2008 R 0 R 108,000 R 121,550 R 0 R 689,000 2009 R 530,000 R 0 R 0 R 0 R 0 2009 R 0 R 80,000 R 202,280 R 0 R 270,000 2010 R 0 R 165,000 R 0 R 350,000 R 0 2010 R 375,000 R 0 R 0 R 0 R 0 2011 R 0 R 0 R 0 R 0 R 0 2011 R 0 R 305,000 R 0 R 450,000 R 0 2012 R 180,000 R 0 R 0 R 450,000 R 820,000 2012 R 420,000 R 350,000 R 0 R 0 R 600,000 2013 R 250,000 R 0 R 0 R 424,000 R 440,000 2013 R 0 R 0 R 0 R 700,000 R 410,000 Gunhill 2008 R 0 R 0 R 0 R 0 Suidrand 2008 R 2,889,500 R 1,395,000 R 2,435,310 R 859,000 R 920,000 2009 R 0 R 0 R 0 R 0 2009 R 455,000 R 216,000 R 382,656 R 0 R 980,000 2010 R 0 R 0 R 500,000 R 0 2010 R 3,123,000 R 288,150 R 2,023,041 R 3,030,871 R 1,537,000 2011 R 0 R 0 R 0 R 0 2011 R 795,000 R 4,371,500 R 0 R 3,940,500 R 2,795,000 2012 R 0 R 0 R 0 R 0 2012 R 4,624,000 R 1,470,000 R 308,574 R 2,798,291 R 900,000 2013 R 0 R 0 R 0 R 0 2013 R 1,552,000 R 500,000 R 575,000 R 5,145,000 R 1,100,000 Kroonheuwel 2008 R 3,485,000 R 1,104,000 R 1,964,286 R 3,604,760 R 725,200 The Meadows 2008 R 0 2009 R 1,570,000 R 576,800 R 994,163 R 855,000 R 710,000 SH 2009 R 0 2010 R 1,431,000 R 1,431,000 R 894,423 R 3,468,487 R 2,370,000 2010 R 0 2011 R 1,235,000 R 480,000 R 1,323,109 R 1,844,000 R 150,000 2011 R 0 2012 R 3,069,000 R 1,695,000 R 320,000 R 3,562,000 R 360,000 2012 R 0 2013 R 3,831,000 R 2,008,000 R 205,700 R 1,591,000 R 820,000 2013 R 0 Kroonstad 2008 R 4,672,500 R 1,661,000 R 2,191,108 R 3,452,800 R 550,000 Tuinhof 2008 R 558,000 R 1,503,000 R 1,713,415 R 0 R 0 Central 2009 R 670,550 R 2,037,600 R 10,408,448 R 975,000 R 0 2009 R 750,000 R 0 R 0 R 0 R 0 2010 R 1,502,000 R 350,000 R 858,110 R 2,049,000 R 0 2010 R 0 R 0 R 0 R 400,000 R 0 2011 R 2,970,000 R 500,000 R 240,264 R 3,790,000 R 1,680,000 2011 R 442,000 R 0 R 0 R 0 R 0 2012 R 850,000 R 465,000 R 0 R 2,791,000 R 0 2012 R 0 R 0 R 0 R 410,000 R 0 2013 R 1,086,600 R 0 R 0 R 2,337,200 R 120,000 2013 R 0 R 0 R 0 R 477,000 R 70,000 Kroonstad 2008 R 0 R 840,000 R 0 R 600,000 R 0 Uitsig 2008 R 960,000 R 875,000 R 0 R 0 R 0 Industrial 2009 R 0 R 0 R 0 R 180,000 R 0 2009 R 879,500 R 0 R 453,448 R 0 R 550,000 2010 R 0 R 0 R 0 R 0 R 0 2010 R 370,000 R 0 R 0 R 1,862,500 R 600,000 2011 R 0 R 496,800 R 0 R 0 R 0 2011 R 320,000 R 0 R 202,508 R 377,000 R 0 2012 R 0 R 0 R 0 R 0 R 0 2012 R 646,000 R 375,250 R 0 R 773,000 R 0 2013 R 0 R 0 R 0 R 0 R 0 2013 R 1,170,000 R 558,600 R 0 R 1,016,000 R 0 Kroonstad SH 2008 R 1,000,000 R 1,189,000 R 1,955,974 R 2,435,000 R 0 Vierfontein SP 2008 R 361,300 R 446,625 R 647,492 R 972,200 R 910,000 2009 R 1,963,000 R 573,990 R 2,585,519 R 490,000 R 0 2009 R 0 R 0 R 0 R 0 R 0 2010 R 0 R 0 R 0 R 1,670,000 R 570,000 2010 R 100,000 R 80,000 R 0 R 480,000 R 0 2011 R 3,525,000 R 0 R 0 R 1,231,000 R 0 2011 R 198,000 R 190,000 R 101,938 R 423,000 R 0 2012 R 5,615,000 R 720,000 R 0 R 1,400,000 R 200,000 2012 R 310,000 R 114,000 R 0 R 0 R 0 2013 R 1,426,000 R 1,670,000 R 720,000 R 1,650,000 R 250,000 2013 R 260,000 R 0 R 409,400 R 0 R 0 Maokeng SP 2008 R 40,000 Viljoenskroon 2008 R 2,852,500 R 3,076,500 R 2,265,155 R 3,274,000 R 1,830,000 2009 R 0 SP 2009 R 880,000 R 950,000 R 0 R 1,327,000 R 1,932,540 2010 R 0 2010 R 1,130,000 R 1,330,000 R 0 R 956,500 R 2,000,000 2011 R 0 2011 R 627,800 R 0 R 0 R 475,000 R 2,945,000 2012 R 0 2012 R 939,000 R 1,726,508 R 0 R 1,494,500 R 1,760,000 2013 R 0 2013 R 2,131,000 R 1,824,000 R 490,000 R 1,845,000 R 430,000 Matlwangtlwan 2008 R 0 Wespark 2008 R 530,000 R 877,000 R 221,893 R 1,211,000 R 100,000 g SP 2009 R 0 2009 R 0 R 586,867 R 0 R 0 R 0 2010 R 0 2010 R 1,335,000 R 220,000 R 395,700 R 751,500 R 0 2011 R 0 2011 R 900,000 R 1,244,500 R 0 R 1,345,000 R 610,000 2012 R 0 2012 R 803,000 R 809,000 R 560,000 R 1,958,000 R 0 2013 R 0 2013 R 500,000 R 1,165,000 R 0 R 4,712,000 R 1,560,000 Moqhaka NU 2008 R 0 R 0 R 0 R 180,000 R 0 Wilgenhof 2008 R 0 R 720,000 R 362,371 R 1,530,000 R 0 2009 R 0 R 0 R 0 R 0 R 0 2009 R 0 R 456,000 R 0 R 0 R 400,000 2010 R 0 R 280,500 R 0 R 0 R 0 2010 R 2,826,000 R 810,000 R 1,875,330 R 540,000 R 0 2011 R 0 R 0 R 0 R 1,050,000 R 0 2011 R 0 R 750,000 R 1,555,000 R 1,080,000 R 1,340,000 2012 R 1,695,000 R 0 R 0 R 0 R 0 2012 R 1,515,000 R 0 R 0 R 1,539,000 R 300,000 2013 R 0 R 800,000 R 0 R 0 R 0 2013 R 0 R 2,602,000 R 1,500,000 R 1,536,000 R 0 Morewag 2008 R 2,658,500 R 2,003,197 R 1,701,513 R 2,567,000 R 0 2009 R 588,000 R 1,659,200 R 344,853 R 1,542,000 R 840,000 Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on 2010 R 1,260,500 R 716,000 R 1,711,822 R 3,745,000 R 700,000 the deeds registry. 2011 R 1,346,000 R 723,289 R 587,679 R 3,482,500 R 1,350,000 Banks 2012 R 2,025,000 R 1,185,000 R 0 R 3,294,600 R 720,000 ABSA 2013 R 1,221,000 R 1,620,000 R 1,055,000 R 2,422,000 R 0 FNB Noordhoek 2008 R 0 R 1,148,000 R 840,137 R 600,200 R 0 Nedbank 2009 R 230,000 R 0 R 0 R 0 R 300,000 Standard Bank 2010 R 250,000 R 380,000 R 0 R 462,500 R 0 Other Lenders 2011 R 743,000 R 295,000 R 0 R 513,000 R 1,115,000 2012 31

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Market Share by Lender: All Residential Bonds 11.6 Market Share Moqhaka, all loans, by suburb by lender, through 2013 Understanding market share at the local

Vierfontein SP level is key to understanding the potential for end-user finance, where gaps might Rammulotsi SP exist, and how to make the case for more

Viljoenskroon SP lending. It is interesting that there has been consistent lending activity throughout all the subplaces in Moqhaka between 2008 and 2013, when often lending is concentrated in a few places. The largest volume of lending is visible in the central part of Moqhaka where the highest concentration of residential properties are Moqhaka NU located.

The Meadows SH Steenwerp Elandia Comparing lending over time and by suburb also shows which lenders perceive Maokeng SP Kroonstad SH Kroonstad Central value or risk. Suidrand

Matlwangtlwang SP

Steynsrus SP

Source: South African Deeds Registry via Lightstone (Pty) Ltd. All indicators reflect formal market data as reflected on the deeds registry.

Total Residential Bonds Lenders 0 ABSA 200 FNB 400 Nedbank 600 Standard Bank ≥ 800 Other Lenders

Market Share by Lender: New Loans 2013 Moqhaka, all new loans made, by suburb by lender, 2013

Vierfontein SP

Rammulotsi SP

Viljoenskroon SP

Moqhaka NU

Steenwerp Kroonstad SH Kroonstad Industrial Wilgenhof

Matlwangtlwang SP

Source: South African Deeds Registry via Lightstone (Pty) Ltd. All indicators reflect formal market data as reflected on the deeds registry.

New Residential Bonds Lenders 0 ABSA 5 FNB 10 Nedbank 15 Standard Bank ≥ 20 Other Lenders

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 12. Leverage

12.1 Key Findings

The presence of older Government-sponsored units within the municipality represent an important opportunity to leverage that investment in affordable housing in the years ahead, as owners seek to sell and move up the housing continuum, if opportunities are positioned properly. About 48% of all registered properties in Moqhaka were sponsored by the Government. The value of these homes if sold in the private market can be applied towards the cost of a new home.

This situation can be used to drive developers to build more gap housing, and financiers to finance RDP acquisition loans.

12.2 Policy Implications

Policies should focus on enticing developers to build more housing in the gap market, and encourage lending to the RDP and other lower cost home markets. Sites could be prioritised, which connect these RDP neighbourhoods to other more active housing markets to encourage mixed income development.

To encourage an increase in the supply of gap housing, Government can unlock sites, supply infrastructure or grants, or hook-up fee discounts. Governments can also reduce the cost of construction finance, which can all be passed down to the buyers in the form of lower sales prices.

Government can create programmes using funds pooled from a range of government and private sector partners, which provide bonds for small properties, and offset risks through loan guarantees, loan loss reserves, and interest rate discounts. Funds can also organise to implement homebuyer counselling, debt consolidation and moderate rehab costs of the existing home to ensure loan performance of the portfolio.

These programmes would work together in the mining towns to create better social, housing and economic integration. In Moqhaka, this might be areas between Phomolong and Morewag, higher priced more active markets, and Kroonheuwel.

12.3 Quick Definitions:

Leverage: the ability to use the percentage of the property that has been paid off as a down payment for another property.

Equity: the value of the residential property less the outstanding balance of the bond. This represents the value of ownership built up in a property, and is often used as the downpayment for the owner’s next house purchased up the housing ladder.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Average Equity to Average Sales Price 12.4 Equity Fills the Gap Moqhaka, 2013 The value of average home equity related to the average sales price R 151K Brentpark R 171K Equity is the value of one’s home less R 220K Charl Malanville R 263K the amount owed to the lender. The R 166K Constantia R 176K chart shows the average equity per R 655K Elandia R 540K suburb (the green bar) compared to R 198K Gelukwaarts R 196K R 352K the average sales price per suburb. Goedgedacht R 425K This helps to show what portion of the Gunhill R 336K R 423K sales price might be paid for by the Kroonheuwel R 390K R 351K homeowners’ equity. Kroonstad Central R 468K R 68K Kroonstad Industrial R 181K

Kroonstad SH R 484K R 779K If a homeowner in Phomolong wished R 53K Maokeng SP R 64K to purchase a home in Morewag, R 140K Matlwangtlwang SP R 87K they could sell their home and apply

Moqhaka NU R 151K R 636K it towards the cost of the new home, R 403K Morewag R 414K reducing the amount they would have R 262K Noordhoek R 328K to borrow. Instead of borrowing over R 825K Panorama R 650K R403 000 (the average sales price), R 143K Phomolong R 183K they would only need about R220 000 Presidentia R 518K R 728K (the orange bar in Morewag minus the R 96K Rammulotsi SP R 99K green bar in Phomolong). Thus, equity R 126K Seisoville R 164K makes homeownership in higher R 77K Steenwerp R 77K R 198K priced neighbourhoods affordable, Steynsrus SP R 290K expanding housing options. Equity R 572K Suidrand R 409K closes the housing gap for less The Meadows SH R 226K R 339K affluent homeowners because their Tuinhof R 411K properties are less likely to have Uitsig R 380K R 536K R 241K Vierfontein SP R 258K a bond, and those markets have R 407K Viljoenskroon SP R 331K experienced more appreciation of R 448K Wespark R 379K value. It is important to consider this R 774K Wilgenhof R 663K value in additional to a homeowner’s R 0K R 100K R 200K R 300K R 400K R 500K R 600K R 700K R 800K R 900K income. Avg Sales Price Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry.

Measure Names Avg Sales Price Equity invested by homeowners also Avg Value of Residential Equity reduces risk by increasing their financial stake in their home. This is the same way upper-income families move up the housing continuum, and is now available at scale for lower- income families, thanks to the massive Government investment in homes for the poor. This requires financing for the lower income buyers, something to explore with lender partners.

While averages in such diverse housing markets are hard to consider meaningfully, the picture does indicate that purchasing power increases (and gaps close) when equity is taken into consideration.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 5 Year Equity Growth 12.5 Accessing Equity Closes Moqhaka, 2013 the Housing Gap and can Drive Rates of equity growth, since 2007 to 2013 Demand

Vierfontein SP Rammulotsi SP Understanding the difference in equity growth rates on a map allows a better Viljoenskroon SP understanding of which property markets can be leveraged to support more new development. Many higher priced areas have experienced modest equity growth (grey areas) or loss (red areas) over the past Moqhaka NU five years. This may be due to increasing The Meadows SH sales prices (rather than amortisation as Steenwerp Elandia Gelukwaarts Kroonstad SH new buyers tend to have less equity, and Kroonstad SP1 Kroonstad Central Brentpark Wilgenhof Suidrand this market has been very active recently). The greatest equity growth over five years (green areas and green lines) has been in less developed areas with fewer sales, and values have accrued to the existing Matlwangtlwang SP Steynsrus SP homeowners. Homes worth less than

Source: Stats SA Census, 2011, South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators re- R500 000 typically have fewer loans, flect formal market data as reflected on the deeds registry. a faster-growing value, and an initial Total Residential properties Avg value of Equity 0 housing cost that was low or free (thanks 1 000 5,97% 50,00% to Government investment in housing). 2 000 ≥ 3 000 Homebuyers can reduce the amount they have to borrow through savings or the equity in their home, if they have an Growth in Equity existing house which they can sell. This Moqhaka, 2008- 2013 lowers their monthly payment or increases The change in the value of average home equity from the price they can afford. Leverage is the practice of using this equity to increase 2008 their housing affordability. This indicator 41% thus becomes very useful for meeting, 40% and closing, the housing gap.

uity 36% Constraints to using leverage in affordable housing markets include the availability

al Eq al 30% 30% of credit for potential buyers to pay the full value of the house; maximising the

denti 26% equity available to the homeowner; the 21% availability of homes up the housing ladder Resi 20% to buy; and in the case of RDP owners,

e of e the ability to sell Government subsidised 17% stock (which comes with an eight-year 13% resale restriction). Other constraints

Valu 10% include household indebtedness, and the 10% willingness of existing homeowners to

ge in ge sell their most important asset. 3% Chan 0% However, policies which address these 2% 0% 0% constraints can expand the housing ladder 2008 2009 2010 2011 2012 2013 in remarkably quick and cost-effective ways. Closing cost assistance, interest Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators rate write downs, and loan loss funds all reflect formal market data as reflected on the deeds registry. cost a fraction of new construction, and Change in Equity put the opportunity (and choice) in the Affordable properties (under R500 000) hands of the homeowner, rather than the All residential properties Government.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 13. Affordability Profile

13.1 Key Findings

13.2 Policy Implications

Affordability constraints due to below-average incomes can be addressed through housing strategies and solutions, which propose creative financing tools and techniques that can reduce financial barriers (such as down payments, interest rates and principal requirements) as well as unlocking equity, rather than simply trying to push costs down.

Lowering the cost of financing can also increase the amount that can be borrowed, which can increase sales prices and the amount of equity a home seller will be able to access to buy their next home.

Lack of adequate affordable supply in areas with very low incomes can often be quickly addressed through the careful considered provision of well-located quality rental housing.

13.3 Quick Definitions:

Affordability: affordability is generally defined as the ability to allocate less than 25-30% of a household’s monthly income towards housing costs. While upper income families’ income enables them to cover the cost of producing and selling a housing unit and thus provides many housing options, lower income families struggle because their income often does not adequately cover the cost of producing and selling a housing unit. Supply is limited and others must collaborate to provide decent affordable housing.

Affordability Ratio: the purchasing power of local incomes to afford local sales prices. The local average sales price is divided by the target house price. This shows the relationship between local incomes and local sales prices – a larger number means that local sales prices are harder for local incomes to afford, implying a mismatch between local housing options and residents.

Housing Gap: the shortfall between the target house price a household can afford and the sales price (or construction cost) of a house. This can be calculated by the difference between the target affordable price and the cost or price of the house.

Target House Price: the sales price affordable to local households, which is calculated using the average area median income available for housing (25% of monthly income) using standard underwriting criteria (typically 20 year amortization at 11%, with 5% down).

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 13.4 Affordability Mind the Gap Table Moqhaka, 2013 Affordability indicators per suburb Actual affordability relies on

Avg Monthly Target house Average Affordable Affordability understanding local household income Subplace Name Income price Sales Price Price Gap Ratio to determine what is reasonably

Brentpark R 7K R 186K R 151K R 35K 0.8 afforded by existing residents, how much of a gap exists and what is Charl Malanville R 7K R 180K R 220K R -40K 1.2 required to ensure more realistic Constantia R 5K R 138K R 166K R -28K 1.2 affordability. The Affordability Ratio is Elandia R 24K R 635K R 655K R -20K 1.0 determined by dividing the purchase

Elandia Prison R 35K R 936K price affordable to the average household income by the average Gelukwaarts R 6K R 157K R 198K R -42K 1.3 sales price. Nationally, it takes three Goedgedacht R 12K R 308K R 352K R -44K 1.1 times the average income to afford Gunhill R 10K R 267K the average sales price, within the Heuwelsig R 0K R 0K mining towns, this ratio averages 2.8. Kroonheuwel R 16K R 410K R 423K R -13K 1.0 This doesn’t mean that families are paying that, it means that most homes Kroonstad Central R 16K R 421K R 351K R 70K 0.8 on the deeds registry are not affordable Kroonstad Industrial R 2K R 54K R 68K R -13K 1.2 to the majority of South Africans. But Kroonstad SH R 12K R 325K R 779K R -454K 2.4 this indicator provides an important

Kroonstad SP1 R 3K R 72K benchmark, by providing a sense of affordability levels, and how well local Maokeng SP R 3K R 88K R 53K R 35K 0.6 markets might be meeting the needs of Marabastad R 3K R 80K local residents. Matlwangtlwang SP R 2K R 60K R 140K R -80K 2.3

Moqhaka NU R 6K R 164K R 151K R 14K 0.9 In Moqhaka, there appear to be gaps in affordability in some Morewag R 14K R 368K R 403K R -36K 1.1 markets, as shown by the negative Noordhoek R 10K R 261K R 262K R -1K 1.0 price gap, the amount by which Panorama R 25K R 671K R 825K R -154K 1.2 local sales prices are higher than Phomolong R 4K R 100K R 143K R -43K 1.4 what’s affordable to local residents. The affordability ratio was a little Presidentia R 22K R 590K R 728K R -138K 1.2 over 1 to 1, meaning the average Rammulotsi SP R 3K R 89K R 96K R -7K 1.1 income could afford the average Seisoville R 4K R 96K R 126K R -30K 1.3 house and less disparity between Steenwerp R 4K R 113K R 77K R 36K 0.7 incomes and prices exists. The Moqhaka

Steynsrus SP R 12K R 328K R 198K R 131K 0.6 NU represents all the non-urban areas surrounding the town, so it’s not Suidrand R 23K R 595K R 572K R 22K 1.0 possible to pinpoint why or where The Meadows SH R 10K R 259K prices and incomes are so unbalanced. Tuinhof R 27K R 710K R 339K R 371K 0.5

Uitsig R 28K R 740K R 536K R 204K 0.7 Introducing new products or strategies are more likely to be sustainable if they Vierfontein SP R 5K R 144K R 241K R -97K 1.7 are responsive to current residents. Viljoenskroon SP R 14K R 375K R 407K R -32K 1.1 The target home price in column 2 Wespark R 19K R 505K R 448K R 57K 0.9 can also be compared to estimated Wilgenhof R 35K R 930K R 774K R 155K 0.8 potential per-unit construction costs, to determine the amount of subsidy Source: StatsSA Census 2011 (with CPI increase); South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. which may be required to build and sell the units to local residents.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Mind the Gap Chart 13.5 Mind the Gap Moqhaka, 2013 Affordability indicators per suburb Brentpark R 7K R 186K R 151K R 35K 0.8 This chart is identical to the previous Charl Malanville R 7K R 180K R 220K R -40K 1.2 chart but shows bar lines to better Constantia R 5K R 138K R 166K R -28K 1.2 visualise differences across the Elandia R 24K R 635K R 655K R -20K 1.0 area. These tables measure relative Elandia Prison R 35K R 936K affordability for each suburb in the Gelukwaarts R 6K R 157K R 198K R -42K 1.3 target area in three ways: starting Goedgedacht R 12K R 308K R 352K R -44K 1.1 with the average income (column 1), Gunhill R 10K R 267K it calculates the average sales price Heuwelsig R 0K R 0K affordable to the average family using Kroonheuwel R 16K R 410K R 423K R -13K 1.0 standard underwriting terms (5% Kroonstad Central R 16K R 421K R 351K R 70K 0.8 down, 11% for 20 years, up to 25% Kroonstad Industrial R 2K R 54K R 68K R -13K 1.2 of household income, column 2). It Kroonstad SH R 12K R 325K R 779K R -454K 2.4 compares that to the area’s average Kroonstad SP1 R 3K R 72K sales price (column 3). Column 4 Maokeng SP R 3K R 88K R 53K R 35K 0.6 (“Affordable Price Gap”) shows the Marabastad R 3K R 80K difference between the average sales Matlwangtlwang SP R 2K R 60K R 140K R -80K 2.3 price and the local target (affordable) Moqhaka NU R 6K R 164K R 151K R 14K 0.9 house price. Column 5 divides the two Morewag R 14K R 368K R 403K R -36K 1.1 values to show the affordability ratio, Noordhoek R 10K R 261K R 262K R -1K 1.0 the number of times it might take the Panorama R 25K R 671K R 825K R -154K 1.2 local income to afford the local sales Phomolong R 4K R 100K R 143K R -43K 1.4 price. For example, in Matlwangtlweng, Presidentia R 22K R 590K R 728K R -138K 1.2 it takes 2.3 times the average income Rammulotsi SP R 3K R 89K R 96K R -7K 1.1 to afford the average sales price. Seisoville R 4K R 96K R 126K R -30K 1.3

Steenwerp R 4K R 113K R 77K R 36K 0.7 In Moqhaka, the average income is Steynsrus SP R 12K R 328K R 198K R 131K 0.6 about R13 500, the average target Suidrand R 23K R 595K R 572K R 22K 1.0 house price is R355 000 (how much The Meadows SH R 10K R 259K house that income can afford), and Tuinhof R 27K R 710K R 339K R 371K 0.5 the average sales price is R386 000. Uitsig R 28K R 740K R 536K R 204K 0.7 Thus, in 2013, it took 1.09 times Vierfontein SP R 5K R 144K R 241K R -97K 1.7 the average income to afford the Viljoenskroon SP R 14K R 375K R 407K R -32K 1.1 average house. These very high level Wespark R 19K R 505K R 448K R 57K 0.9 indicators are useful when comparing Wilgenhof R 35K R 930K R 774K R 155K 0.8 Avg = R 12K Avg = R 324K Avg = R 341K Avg = 1.1 R 20.0K R 40.0K R 0K R 500K R 1,000K R 0K R 500K R 1,000K R -500K R 500K 0.0 1.0 2.0 affordability, to see which areas are Avg Monthly HH income Target house price Avg Sales Price Affordable Price Gap Affordability Ratio more or less affordable. This helps one Source: StatsSA Census 2011 (with CPI increase); South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. to understand how housing strategies need to address affordability within the town, including what resources or policies might be required to help fill these gaps (ie. affordable financing, buyer subsidies).

When affordability is an issue, perhaps equity of existing homeowners can help fund the gap. Policies will need to encourage the sale of lower cost homes that can allow housing purchases further upstream for lower income households.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 13.6 Mapping Affordability

These maps show the importance of taking local household income, or purchasing power, into the understanding of affordability. The first map shows average sales prices by suburb, with the darker areas having higher prices. The second map shows the same area by affordability ratio, the darker areas (those with higher affordability ratios) showing a greater difference between suburb incomes and suburb sales prices. While some areas appear affordable by sales price (such as Rammulotsi SP), they are not as affordable when considering local incomes (the darker green on the second map). These analyses do not take into account the indebtedness of potential buyers, an important factor in determining bond eligibility. Rental housing, therefore, might be an important option towards providing well- located and professionally managed affordable housing in those areas.

The areas with no dots have no residential properties on the deeds registry – they are farms or open space, mines or informal settlements.

Affordable Suburbs by Average Sales Price Moqhaka, Suburbs by average sales price and household size, 2013

Vierfontein SP

Rammulotsi SP

Viljoenskroon SP

Affordable Suburbs by Affordability Ratio Moqhaka, by suburb, 2013 Relationship between average income and sales price (higher is less affordable)

Moqhaka NU Vierfontein SP

Steenwerp Elandia Rammulotsi SP

Gelukwaarts Kroonstad SH

Brentpark Wilgenhof Suidrand

Moqhaka NU

Kroonstad SH

Seisoville Matlwangtlwang SP

Steynsrus SP

Matlwangtlwang SP

Source: Centre for Affordable Housing Finance in Africa, with StatsSA Census 2011 (with CPI increase); South African Deeds Reg- istry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. Source: Stats SA Census, 2011, South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. Total Residential properties Affordability Ratio 0 0,5 3,0 Total Residential properties Sales Price 0 1 000 50 000 500 000 1 000 2 000 2 000 3 000 3 000 ≥ 4 000 4 012

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 14. Rental Index

14.1 Key Findings

According to the 2011 StatsSA census, 28% of households rent in Moqhaka, which is mid-range amongst the mining towns in the study of 31%. In Moqhaka, it appears that two subplaces scored above 6 on the rental index, ie. Morewag and Charl Malanville; this suggests that the opportunity for rental housing is strongest within these specific areas.

Those areas with greater density, modest incomes, and affordability challenges are more likely to support quality, professionally managed and affordable rental housing. Rental housing also provides flexibility to employers and workers as mining markets expand and contract from time to time.

14.2 Policy Implications

Due to the cyclical, commodity and-demand-driven nature of these towns’ primary industry, rental housing becomes a very important housing solution.

Rapidly changing housing demand driven by mining activities makes a strong case for prioritising quality rental housing. If rental housing is well-situated and convenient to transport and centrally located in dense areas, it can bring social and economic cohesion and vibrancy to housing markets over the longer term. Densifying housing markets requires infrastructure upgrades and financial mechanisms which provide for long-term affordability and sustainability.

14.3 Quick Definitions:

Rental Index: A tool used to measure the potential suitability of local areas for rental housing, as measured by a group of five indicators which support rental housing, including density; area median income; the affordability ratio; and market growth as measured by the Housing Performance Index. A higher score implies greater success for rental housing.

Area Median Income: the percentage of the average local income to the municipal average income, which allows for understanding the income relative to the market overall, and across many municipalities.

Housing Performance Index: the growth of the local suburb in six key housing market indicators as compared to the municipality growth. A higher number implies more growth.

Percent Households Renting: the number of surveyed households who rent divided by the total number of households, per StatsSA census 2011. This includes everything from bedrooms and backyard shacks to single family homes and sectional title units.

Population Density: the number of people per square hectare of the suburb, as provided by StatsSA.

Tenure: the terms under which land or buildings are held or occupied, e.g. rental, ownership, etc.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 14.4 Rental Housing: Driving Rental Index Moqhaka, by suburb, 2013 an Affordable Housing Those suburbs with a higher likelihood of rental demand Option

Moqhaka NU Rental housing is one of the most efficient and effective ways to provide affordable accommodation. In most South African towns, this means backyard shacks, an important Steenwerp but inefficient way of meeting overwhelming housing need. While a

Constantia social housing sector exists targeting Charl Malanville lower income families in multi-unit Seisoville buildings, these are primarily in large metropolitan areas.

Many private developers and investors are considering expanding significantly into the rental segment. If the demand is Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry. better understood Governmentscan Number of Residential properties Type Rental Profile 0 Informal Settlement High meet housing backlogs quickly and 1 000 Mines Low affordably by promoting policies 2 000 3 000 which target affordable rental 4 012 housing.

Several conditions are crucial for the Rental Index Method Implies Weight creation of successful and sustainable Indicator rental markets: density, high demand, and affordability. In order to sustain 80 -120% area median Median Income Affordability 25% rental housing at scale, projects must income be able to achieve density to keep Population Density Exceeds metro average Density 25% costs down, and access ready markets, Housing Growing Demand 15% with good proximity to jobs, transport Performance Index and educational opportunities to keep Ratio exceeds metro Affordability Ratio Affordability 15% projects running smoothly. It is possible average to bundle those indicators and find those areas primed for rental housing.

14.5 Locating Rental Housing Markets

The map shows those areas with above-average densities, moderate incomes, and above average households who are currently renting, all important factors when considering the placement and promotion of rental housing. By bundling a set of housing market indicators, it is possible to find those places where a rental strategy might be well-suited.

In Moqhaka, it appears that two subplaces scored above 6 on the rental index, i.e. Morewag and Charl Malanville, this suggests that the opportunity for rental housing is strongest within these specific areas. Both areas are relatively far from mines and informal settlements, thus rental housing in these areas might target support service workers and families.

With security of tenure through a lease agreement, residents have access to quality, accountable property management, and consistent utility access and can even build up their credit history with positive rent and utility accounts. Because rental housing providers must locate their properties competitively to ensure monthly occupancy, rental housing provides affordable access to transport hubs, jobs and community services.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 15. Key Concepts

The definitions of the concepts used in this profile are set out in alphabetical order below.

15.1 Affordable

Traditionally, affordable refers to housing or areas with prices or values below the overall market which target below- average incomes. It is often defined as R500 000 or less (but can be higher or lower depending on intent) because this is the amount that a household earning less than R16 000 on average can afford, which is the target limit of many Government subsidy schemes. Affordability is the relationship between the cost of housing (a mortgage bond payment or rent) and the income of the tenant or owner. Affordable housing is that which can be rented or purchased within certain constraints: in this report, with a mortgage equal to 28% of the borrower’s income, at 11% over 20 years, with 5% of the sales price paid as down-payment. Areas where the average income can afford the average sales price or more, are considered affordable.

15.2 Affordability Ratio

This ratio measures relative affordability by comparing the AVERAGE sales price to the average income within the same area – higher ratios meaning less affordability. The average sales price is divided by the AFFORDABLE sales price, which is calculated as the present value of typical mortgage terms using 28% of the average income (95% of the average sale price, at 11% for 20 years). A ratio of 1 means that the average home price is exactly equal to the average household income. Ratios over 1 represent the number of times by which the average income must be increased to afford the average home.

15.3 Appreciation

The rate, or percent change, over time between two values (most often price or value) is calculated by dividing the difference between the beginning and end values of the property in the timeframe, by the beginning value. The result is the percent by which the property value or price changed. It is a valuable means of comparing the rate of change across very different property markets, areas or market sizes.

15.4 Average

The result obtained by adding several amounts together and then dividing this total by the number of amounts. For instance, average sales price is calculated by adding up all sales within an area and dividing this total by the total number of sales within an area. The average is useful for comparing and understanding different areas, market sizes and property types.

15.5 Benchmark

An indicator that is calculated in the same way across a larger level (such as national or municipal levels) to compare with smaller areas (such as main places or suburbs). Benchmarks are useful for understanding the performance of housing markets because they provide a consistent means of comparing markets to each other and to larger areas. As example, local markets perceived as having modest appreciation rates may actually be growing quickly when compared with other areas, the metro or the Country as a whole. Benchmarks are key components of the housing performance index, which uses them to determine whether local areas or metros are changing faster than, about the same as, or slower than the metros or the Country.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 15.6 Bonded Sale

A sales transaction transferring ownership of a property which includes an associated mortgage bond, used by the buyer to purchase that property and which the lender requires to be secured by that property. Bonded sales reflect lender investment in an area and perceptions of market strength and risk levels.

15.7 Churn

The total number of homes sold within an area over a one-year period, divided by the number of homes within that area. Similar to turnover, churn represents active market interest, a large pool of eligible buyers and willing sellers and ready access to mortgage financing. In affordable areas, lower churn can reflect reduced housing mobility rather than less marketability, as the result of fewer upward housing options for potential sellers and less access to bond financing for potential buyers. Other indicators (such as bond rates or types, loan to values, equity rates and income) can help differentiate marketability from pent-up market mobility.

15.8 Equity

The value of ownership interest in a property, primarily the current VALUE of a property minus the current value of any bonds or other claims on the property. Equity value grows as mortgage balances are paid down and property values increase. Equity is realised when a house is sold and is most often used to purchase another property, by increasing the amount available to purchase or lowering monthly mortgage payments (or both). Individual circumstances within neighbourhoods may vary widely but areas with higher aggregate levels of equity represent greater opportunity for upward mobility, both for existing residents who can sell and invest the equity in a new home and for lower-income households able to purchase the existing home.

15.9 Equity Growth

The rate at which an owner or investor’s equity value has changed over time, calculated by dividing the difference between the values of equity at the beginning and end of the period by the beginning year’s equity value. Growth in equity (along with income levels) can be used to determine market potential, as equity significantly boosts the purchasing power of potential buyers. Circumstances that increase equity return include prices that appreciate faster than debt is paid down, less debt, and registrations of new properties with no debt.

15.10 Formal Housing Market

A formal housing market is an area where owners sell or otherwise transfer residential properties (which have been registered on the national title and deed registry) to willing buyers who become the legal owners of those properties. Housing markets also include residences that are rented, traded, bartered or otherwise swapped, or legally occupied. This report tracks formal housing markets, as it only uses actual sales reflected on the South African deeds registry. It is estimated that 25 – 50% of all properties in South Africa are not registered.

15.11 Housing Continuum

The housing continuum includes all ranges and options of housing, from temporary shelter and informal housing to the highest variety of housing ownership and occupancy models and prices. A continuum implies a continuous, connected marketplace of housing options, which serve the full range of conceivable housing demands as people’s lifestyles and life circumstances change over time. In reality, most housing markets are an uneven distribution of housing supply and housing demand.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 15.12 Leverage

Leverage is the practice of purchasing something by borrowing part of the total cost and it is measured by the degree to which a buyer has borrowed funds to purchase a home. Also called gearing, leverage can be measured in several ways (such as loan to value or equity ratio) but all compare bond amounts to the housing value. Generally, homes or neighbourhoods that are highly leveraged are understood to be higher risk because owners lose less equity if they default. Areas with lower leverage rates are generally considered as being more attractive because lenders have less risk, while owners have more invested and have more potential EQUITY to invest in new housing options.

15.13 Market Segment

This refers to the aggregate of all properties within a certain Rand value. Properties are grouped by their value to better understand the unique dynamics of these market segments. Values are divided into four bands: values under R250 000; between R250 000 and R500 000; R500 000 to R1.2 million; and over R1.2 million. Generally, properties at or below R500 000 are considered affordable because the estimated monthly housing cost (R15 000 to R16 000) is considered the maximum income eligible for many Government subsidy programmes, above which potential buyers must access the unsubsidised housing market.

15.14 Market Share

Market share is the percentage of a market accounted for by a specific entity in that market. Lending market share is determined by the number of all loans in an area or bond portfolio originated or held by a single institution, divided by the total number of bonds in the area or portfolio. Market share can reflect the business model or the prevailing attitudes of particular lenders towards opportunity within certain areas. Lenders track their market share by area and value carefully: too high could mean that they are at greater risk if values decrease, while too low means that the lender may be losing business to competitors.

15.15 Rental Index

A score calculated for each suburb, to measure the potential suitability of local areas for rental housing, as measured by a basket of six indicators which are more favourable towards rental housing. A higher score, between 1 and 10, implies a greater likelihood of success. These indicators include density, the number of households currently renting, area median income, the affordability ratio, households to properties ratio and market growth as measured by the housing performance index. The index gives higher weight to aspects more suitable to rental housing, such as density and income, and moderate weight to the current number of households renting (as reported to the census), the local income as a percentage of the municipal median income, affordability (the relationship between local incomes and sales prices) and the number of households in the area to formal housing units on the deeds registry.

15.16 Suburb

A neighbourhood (within or beyond the central metropolitan area), with an identifiable name, often socially accepted borders and common characteristics. This report uses suburb boundaries as established and demarcated by StatsSA (and referred to in its documentation as sub-places). In 2011, there were about 22 000 sub-places within South Africa.

15.17 Value or Worth

The value of a property as determined by several factors, including recent comparable sales nearby, CHURN, lending activity in the area, specific and area property details such as the size, age and amenities. A property’s worth is often related to the amount of information available to make an appropriate determination, which is a contributing factor in undervaluing affordable areas where details on formal market activity are inconsistent. This study uses Lightstone’s (www.lightstone.co.za) proprietary valuation methodology to determine value.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report 16. Source List

• Africa Mining IQ. [sa]. Coal Mining in South Africa. [O]. Available at http://www.projectsiq.co.za/coal- mining-in-south-africa.htm. Accessed 09 February 2015 • Anglo American. 2011. The A Magazine: Partnership for Success. [O]. Available at http://southafrica. angloamerican.com/media/~/media/1AE5E719F7AB44B790756A552900D6B6.pdf Accessed 09 February 2015. • Council of Geoscience. 2015. Summary of Economic Geology of Provinces: Free State Province. [O]. Available at http://www.geoscience.org.za/economic-geology/free-state Accessed 09 March 2015. • Moqhaka Local Municipality. 2014. Moqhaka Local Local Municipality 2014/2015 Draft IDP. Moqhaka Local

Photo Credits

• Rawoot. I. 2011. Toilet Tenders. [O]. Available at http://mg.co.za/article/2011-05-13-toilet-tenders-stink Accessed 09 March 2015. • S.A. Parliament. 2013. Human Settlements Committee Strongly Condemns Demolishing of Toilets. [O]. Available at http://www.parliament.gov.za/live/content.php?Item_ID=3239 Accessed 09 March 2015. • Sedibeng District Municipality.[SA] Vaal 21. [O]. Available at http://www.sedibeng.gov.za/index_vaal21.html Accessed 09 March 2015.

The Housing Development Agency | Moqhaka Mining Town Housing Market Report Notes Notes Notes

Department of Human Settlement The Housing Development Agency (HDA) 240 Justice Mahomed Street 6 - 10 Riviera Road Govan Mbeki House Riviera Office Park, Block A Sunnyside, Pretoria Killarney 0002 Johannesburg, 2193

Private Bag X645 (Minister) PO Box 3209 Pretoria Houghton, South Africa, 2041 South Africa, 0001 Phone: +27 11 544 1000 Phone: +27 12 421 1311 Fax: +27 11 544 1006/7 Website: www.dhs.gov.za Website: www.thehda.co.za