Demographic Projections

This section represents a summary of the demographic projections and statistics utilised in understanding the situational analysis for the SHSUP. A detailed report was submitted in the first Phase of the SHSUP and guided the findings and future processes of the plan.

Estimated Population / Household Growth

In developing the SHSUP with a longer-term time horizon, the City has utilised a demographic projection that was developed in conjunction with the CSIR. Supplementary inputs have been made by the lead Project Team’s associate, Demacon. The projections and “headline” statistics were the basis of the modelling component of the SHSUP and were utilised in the development and testing of the model.

Tables 3 and 4 illustrate the anticipated growth of population and households between 2010 and 2030. There were three scenarios considered, a Base, Low and High rate of growth. For the purposes of the model, the Base scenario was selected as the most appropriate scenario for future growth. The projections of this Base scenario suggest that the population would grow from 3.7 million to 4.3 million within the 20 year time period. In terms of household growth, this translates into an additional 460,000 households (29,500 people / 23,300 households per annum).

What is important to note is the large discrepancy between the high and low projections. In terms of the population count, this differs by as much as 2 million (representing a 36% population growth between 2010 and 2030 on the High projection) and a 2% increase on the low projection.

Table 3: City of Johannesburg Population Forecast (2010-2030) Difference Total Population 2010 2015 2020 2025 2030 2010-2030 Low 3 650 310 3 715 745 3 744 788 3 741 030 3 709 514 59 203 Base 3 710 295 3 893 159 4 053 491 4 191 258 4 300 882 590 588 High 3 753 316 4 083 156 4 496 996 5 078 780 5 814 687 2 061 371 Source: Demacon Ex Global Insight

Table 4: City of Johannesburg Household Forecast (2010-2030) Total Number of Difference 2010 2015 2020 2025 2030 Households 2010-2030 Low 1 263 557 1 367 524 1 445 215 1 503 016 1 548 375 284 817 Base 1 278 813 1 417 617 1 538 149 1 645 588 1 744 881 466 068 High 1 288 384 1 467 136 1 660 849 1 918 908 2 230 807 942 423 Source: Demacon Ex Global Insight

The base scenario is a projection based on the “best guess” for the various demographic variables, and includes a trend of urbanisation decreasing over time. For the high and low scenarios, the following assumptions were made relative to the base scenario (Table 5).

Table 5: Low and High Scenario Assumptions Fertility Assumption HIV/AIDS Assumption Life Expectancy Migration Assumption Assumption Low:  Lower fertility rate,  A 5% higher  Life-expectancy will  Lower in-migration from 2008 phased in HIV/AIDS prevalence decrease by 2 years than the base, i.e. over the years, rate (relative to the phased in from 2008 slower urbanization reaching a level of base scenario) from onwards both as a rates. Reduced in- 3% lower than the 2008 onwards. result from the higher migration over time. base scenario total HIV/AIDS but also fertility rate in 2011. due other health sector issues High  This scenario  A cure for HIV/AIDS  Assume a higher life-  Higher levels of in- assumes a constant will be developed in expectancy, phase-in migration; faster fertility rate from the very near future. from 2008 onwards, urbanisation trends. 2008 onwards. For  Prevalence rate of to clear the current the base scenario we HIV/AIDS will reduce racial differences in have an assumption from 2012 onwards, life-expectancy. of a decline fertility dropping 20% each rate over time. year, to complete a bell-shape prevalence curve over time.

The following figure illustrates the three scenarios (low, base, high) in terms of number of households (2010-2030).

Figure 3: City of Johannesburg Household Forecast (2010-2030)

Source: Demacon Ex Global Insight

Figure 4: Population Increase (2001-2030) – Base Scenario

Source: Demacon Ex Global Insight

Figure 5: Number of Households Increase (2001-2030) – Base Scenario

Source: Demacon Ex Global Insight

Demographic Profile

Table 6 reflects a summary of the key demographic characteristics within the City of Johannesburg.

Table 6: Key socio-economic indicators of the City of Johannesburg Variable Market Characteristics Population size (2012)  3,786,849 Number of Households (2012)  1,337,163 Household Size  2.9 Age profile  0-14 years: 22.7% Variable Market Characteristics  15-19 years: 8.2%  20-34 years: 34.3%  35-64 years: 30.7%  65 + years: 4.1%  Economically active (15-56 years): 73.2% Gender  Male: 49.8%  Female: 50.2% Race  African black: 73.4%  Coloured: 6.4%  White 4.2%  Indian Asian: 16.0% Highest level of education  No schooling: 7.2%  Some primary: 10.1%  Complete primary: 5.4%  Some secondary: 34.8%  Std 10 / Grade 12: 28.7%  Higher: 13.9% Level of employment  Economically active: 73.2%  Employed: 62.7%  Unemployed: 37.3% Occupation profile  Elementary occupations: 21.9%  Clerks: 14.6%  Service workers, shop and market sales workers: 13.7%  Crafts and related workers: 11.8%  Professionals: 11.3%  Technicians and associated professionals: 10.4% Dwelling types  House or brick structure on a separate stand of yard: 50.8%  Informal dwelling / shack NOT in back yard: 13.3%  Flat in block of flats: 10.1%  House / flat / room in back yard: 8.3%  Informal dwelling / shack in back yard: 7.8% Tenure status  Rented: 33.0%  Owned and fully paid off: 25.2%  Owned but not yet paid off: 22.0%  Occupied rent-free: 19.8% Transport  On foot: 47.8%  By minibus: 35.2%  By train 7.4%  By bus: 6.8%  By bicycle: 0.9% Average household income (2012)  LSM All: R264 420 annually; R22 035 per month  LSM 4-10+: R440 583 annually; R36 715 per month LSM Profile*  LSM 1-3: 44.4% Variable Market Characteristics  LSM 4-5: 13.4%  LSM 6-7: 21.1%  LSM 8-10+: 21.1% Source: Demacon Ex Global Insight * Note: Demacon Household Survey & GIS Data Source 2012

3.4.2.1 Age Profile

The following findings are noted in terms of the age profile of the City’s population (Figure 6):  22.7% of the City’s population are aged between the ages of 0 and 14 years.  8.2% of the City’s population are aged between the ages of 15 and 19 years.  34.3% of the City’s population are aged between the ages of 20 and 34 years.  30.7% of the City’s population are aged between the ages of 35 and 64 years.  4.1% % of the City’s population are aged over 65 years.

Figure 6: CoJ Age Profiles

Series1, 65+,CoJ Age Profiles 4.1, 4%

Series1, 0-14, 22.7, 23% Series1, 35-64, 30.7, 31% Series1, 15-19, 8.2, 8%

Series1, 20-34, 34.4, 34%

3.4.2.2 Education Levels

The population in Johannesburg reflects the following education levels (Figure 7):

Figure 7: Schooling Levels within CoJ

Employment

A relatively small segment of the population is not economically active, although there are only a small number of the population segment younger than 15 years of age; older than 65 years; or have physical disabilities.  Of the 73.0% of the population that are economically active – 62.7% are employed and 37.3% are unemployed.  The primary source market is characterised by a relatively large economically active market segment of which approximately two-thirds are employed, reflecting low dependency ratios.  The high levels of employment in conjunction with the moderate level of education reflect a market with a demand focused towards middle to higher range commercial products and services.  The unemployment rate of primary market (37.3%) is higher than the national figure of 24%.

Breakdown of Income Groups

The National Development Plan forecast for 2030 and 2050 suggests that a large proportion of new urban residents will be poor, reflecting a phenomenon referred to as the “urbanisation of poverty”. The Living Standards Measure (LSM) index is an internationally recognised instrument designed to profile a market in terms of a continuum of progressively more developed and sophisticated market segments. The LSM system is based on a set of marketing differentiators, which group consumers according to their standard of living, using criteria such as degree of urbanisation and ownership of assets (predominantly luxury goods).

Essentially, the LSM system is a wealth measure based on standard of living, rather than income alone. The market segmentation continuum is divided into ten LSM segments, where LSM 1 signifies the lowest living standard and LSM 10+ signifies the highest living standard.

The weighted average annual household income in the City amounts to: Annual Monthly LSM 1-3 R25 364 R2 114 LSM 4-5 R98 960 R8 247 LSM 6-10+ R850 505 R70 875 LSM All R264 420 R22 035 LSM 4-10+ R440 583 R36 715

There is a direct correlation between household income (Living Standard Measure (LSM categories) and housing demand. Approximately 44.4% of the households residing in the Johannesburg area fall within the LSM 1-3 category, which indicates a low income profile and a potential dependency on State sponsorship or the informal market for housing purposes. An additional 13.4% (LSM 4-5) represents a gap market that can barely afford entry level housing. 42.2% is considered to be higher income within the LSM 6-10 categories – representing the private-driven, bonded market.

The City of Johannesburg is characterised by mainly a lower income and middle income segment and a smaller high income segment. 18.7% of the total population in the City reflect no income, followed by 4.2% that earn an income between R2 and R8,560 annually.

Map 11 reflects the spatial distribution of the LSM groupings.

Map 11: Johannesburg LSM Profile

Segmenting the Housing Market

Table 7 and Figure 8 below provide an indication of how the residential market may be segmented according to income and relative affordability in terms of monthly payments and product or price/ loan.

Table 7: Households Segments Monthly Household Income Affordability Profile < R3,500 Subsidised market R3,500 – R7,500 Finance linked subsidised market R3,500 – R15,000 Entry level bonded market >R15,000 High to middle income bonded market

Figure 8: Segmenting the National Housing Market

HOUSEHOLD PROPORTION OF HOUSEHOLDS (South Africa) DEEMED PRODUCT INCOME TENURE & HOUSING TYPE AFFORDABILITY PRICE (R/month) (% of All Households - Census, 2001 Estimate) (% inc & R/Mnth (R Total) 8 VERY HIGH Max >R 10001 Min R 10,001 25% / +R2500.25/m R 308,767 7 HIGH Max R 10,000 22.5% / to R2250/m R 259,062 Min R 7,001 R 181,369 6 HIGH-MIDDLE Max R 7,000 20% / to R1400/m R 140,196 Min R 5,001 R 100,160 5 MIDDLE Max R 5,000 17.5% / to R875/m R 87,623 Min R 3,501 R 61,353 4 LOW-MIDDLE Max R 3,500 15% / to R525/m R 76,923 Min R 2,501 R 66,152 3 LOW INCOME Max R 2,500 12.5% / to R312.5/m R 53,235 Min R 1,501 R 47,622 2 V. LOW INCOME Max R 1,500 7.5% / to R112.5/m R 38,630 Min R 801 R 37,735 1 SPECIAL NEEDS Max R 800 0% / to R0/m R 36,708 Min R 0 R 36,708

SHI (0.5%)

Co. (1.6%)

Ex

Informal

(27.2%) (11.5%) (12.3%)

Subsidy

Council

(15.2%) (11.4%)

Private Private Private

Tribal

(7.6%) (7.6%)

Squat

-

council

Squatting Ownership (51.1%) Rental (35.5%) (12.3%)

Source: Kecia Rust, David Gardner, Andreas Bertoldi, 2005

Within the City, the majority of the population (33.0%) rent the property they occupy, whilst 19.7% of are understood to be occupying a residence “rent-free”.

25.2% of the City’s population occupy a property that is owned and fully paid off. Conversely, 22.0% of the population in the City are bond holders i.e. owning the property but still committed to repayments. The majority of the population in the City (50.8%) occupy a house or brick structure on a separate stand or yard.

13.3% of the population occupy an informal dwelling / shack NOT in backyard, whilst 10.1% occupy a flat in a block of flats and 8.3% occupy a house / flat / room in back yard.

City’s Deprivation Index

Noting the preceding commentary on Income, Employment and Educational and Living Environment aspects, it is worth comparing those aspects against the City’s Deprivation Index. The Index was initially developed by the Human Sciences Resource Council in conjunction with the University of Oxford, United Kingdom and assistance and collaboration of the City.

A detailed report published in January 20081 considered the following five themes:

 Income  Employment  Health  Education  Living Environment

The criteria considered for each of these themes is summarised in the Table 8 below:

Table 8: Criteria applied in compilation respective Deprivation Domains Income and Material  Number of people living in a household that has a household income < 40% of Deprivation Domain the mean equivalent household income  Number of people living in a household without a refrigerator  Number of people living in a household with neither television nor radio Employment Deprivation  Number of people who are unemployed Domain  Number of people who are not working due to illness and disability Health Deprivation  Years of potential life lost (derived from premature death rates) Domain Education Deprivation  Number of 10 – 65 yr olds who have no schooling at Secondary level or above Domain Living Environment  Number of people living in a household that have no access to a telephone Deprivation Domain  Number of people living in a household that has no piped water inside the dwelling or yard nearby  Number of people living in a household that has no use of electricity for lighting  Number of people living in a household that is a shack  Number of people living in a household that has neither a pit latrine with ventilation nor a flush toilet  Number of people living in a household that has two or more people per room (Source of answers = National 2001 Census from Statistics South Africa)

The consolidated spatial distribution of the five indicators is represented in Map 12.

Map 12: Spatial Manifestation of the Deprivation Index

1 Noble, M. And Barnes, H (2008) A Deprivation Analysis of the City of Johannesburg Metropolitan Municipality, Oxford: Centre for the Analysis of south African Social Policy, University of Oxford, UK.

The index is rated from 1 (least) – 10 (most deprived). An initial assessment of the Deprivation Index reflects:

 A strong congruence between the City’s Marginalised Areas denoted and prioritsed in the City’s Growth Management Strategy and the most “deprived” areas as per the Deprivation Domain methodology. The areas that reflect 9-10 on the scale include: Ivory and Ebony Park, Kaalfontein, Diepsloot, Zandspruit, Cosmo City, Princess Plots, Alexandra, Tshepisong, Slovolville, Braam Fischerville, Stormill, Greater Orange Farm / Drieziek / Stretford, Eikenhof and some of the central/southern townships of Johannesburg Central Business District. The prevalence of informal settlements in most of these locations is a likely contributing factor to the deprived status and the extent of the deprivation rating.  A complex and varied Soweto profile, reflecting the extremes of scoring. Pockets of extreme deprivation neighbour more balanced, less deprived areas.  To the south of the City, the Marginalised Areas reflecting Lenasia / Lawley Estate / Mid- Ennerdale / Lenasia South are relatively less deprived than other of the Marginalised Areas of the South (e.g. Poortjie, Orange Farm etc.)  The prevalence of extreme deprivation within large parts of the Inner City and along the highway / rail “corridor” towards the Johannesburg / Ekurhuleni boundary.  Largely uninterrupted, low levels of deprivation throughout the central-northern areas of the City.

3.4.7 Summary of Development Implications From Demographics

 The City is predominantly characterised by low to middle income earning consumer market.  The increase in the population, particularly in the lower income bracket, exacerbates the current problem of meeting the housing backlog. The inability of current housing policy to respond to this problem makes this an even greater challenge. 44% of the City’s population require government assistance, and many in the gap market as well.  There is a direct correlation between household income (Living Standard Measure (LSM categories) and housing demand.  A higher percentage of the population under the age of 15 highlights a need for more investment in schools and other relevant social infrastructure. Equally important is the issue of affordability. The age structure can also be used to help predict potential political issues. For example, the rapid growth of a young adult population unable to find gainful employment can lead to social unrest.  A young adult population that may currently be seeking employment predominantly characterizes the primary market as 34.3% of the current population is aged 20 – 34 years. The current youth will be future home owners and rates payers and therefore their ability to pay for services and shelter will be directly linked to employment. The City will need to play a role in facilitating both public and private investment in strategic areas in the City for job creation.  Overall these income trends correlate with the findings of the preceding sections and impact directly on the overall living standard measurement of the market. Affordability remains a major challenge for a large part of the population into the future.  Education and standard of living are some of the primary indicators of market potential. A moderate segment of the adult market population is educated and it is anticipated that this will be reflected in the employment and overall living standard profile of the market.  In the primary market, the higher education segment is 13.9%. The national figure for higher education amounts to 11.0% - this implies that the primary market’s education levels are above the national norm. This will have an impact on the type of commercial products and services demanded within the market area.  The City of Johannesburg’s economy is currently growing at 4.3% which generates approximately 29,639 job opportunities annually. It is noted that the total population is growing by 20,000 households per annum, which can be translated into 70,000 people per annum (3.5 people per households). Of this, approximately 70% (49,000 people) are economically active of age.  There is a clear gap (approximately 20,000 people) in the number of people the city can sustain in terms of job opportunities. Therefore, there is currently an influx of approximately 20,000 people per annum who have no employment option within the metro.  For the City to be able to sustain all its residents (in terms of job creation), the City’s economy needs to grow at a rate of between 6%-8%.

CURRENT HOUSING BACKLOGS AND FUTURE INCREMENTAL DEMAND

From the population projections reflected in section 3.4.1 above (Tables 3 and 4) it was indicated that in terms of the Base Scenario the City can expect an increment of about 466,068 households between 2010 and 2030. In terms of the Low Scenario this figure is estimated to be 284,817 and in terms of the High Scenario about 942,423 units.

Of the 466,068 additional households, an estimated 103,802 units would fall within the low income group, 176,437 in the middle income, and 185,829 in the high income bracket.

The above figures would thus represent the projected future incremental housing demand in the City over the next 20 years.

There is also the existing housing backlog which manifests itself in informal settlements located throughout the City (refer to Map 13). According to the latest counts conducted for the City’s Sustainable Human Settlement Plan (March 2012), there is an estimated 164,939 informal structures located within informal settlements in the City with the largest single concentration in the Ivory Park area.

Apart from the structures located in informal settlements, there are also informal backyard dwellings which account for about 320,652 families (see Map 14). The largest concentration of backyard dwellings is located in the Soweto area.

If the existing backlog of 164,939 informal structures and 320,652 backyard units are added to the projected future demand of 466,068 units, it brings the total projected demand for the City for the next twenty years to about 951,658 units. Table 9 below summarises the demand per income category.

Table 9: Demand per Income Category

2010-2030 Existing Total

Low Income 103 802 164 939 + 320 652 589 393

Medium Income 176 437 176 437

High Income 185 829 185 829

951 658

The total low income demand is 589,393 units (164,939 existing informal plus 320,652 backyard plus 103,802 incremental demand).

For the middle income category the demand up to 2030 is 176,437, and for the high income it is 185,829 units.

It should be noted that there are various interpretations of what is considered as informal structures in informal settlements; informal structures in backyards; transitional housing (development-in-process (formal or informal)) and formalised housing in township areas. As a result the figures quoted for informal and backyards can vary significantly between different sources. There are currently processes underway to standardise the categories and interpretation thereof throughout the City. The figures quoted in this study are from the City’s Sustainable Human Settlement Plan (March 2012).

Property Market Supply and Demand

Residential Growth

It is estimated that the City’s residential base grew by an additional 166,000 units from 2001 to 2009, (± 21,000 units / 70,000 people per annum). Approximately 35% (7,500 units) of this growth is represented by formal, rateable units (corresponding to formal building plans passed data) and 13,500 informal opportunities via informal via settlements and backyard structures. The pattern of residential growth during this period is graphically represented on Map 15.

Map 15: Johannesburg Residential Growth (2001-2009) Growth: +/- 8 500 units per annum

Growth: +/- 4 000 units per annum

Growth: +/- 300 units per annum

Growth: +/- 1 500 Growth: +/- 6 500 units per annum units per annum

NB: The City’s economy has averaged growth of 4.3% over the past decade. This translates to approximately 30,000 jobs per annum. The two rates of growth (i.e. household and employment) suggest a major deficit in respect of the ability of the City to directly “absorb” citizens into the mainstream economy. Approximately 70% (49,000) of the growing population is assumed to be economically active leaving a deficit of 20,000 people who cannot be absorbed into the main stream economy. For the City to make inroads into unemployment and, by implication, become more sustainable the City’s economy needs to grow at rates of between 6% and 8%.

The consequences of failing to meet these economic growth targets and a subsequent over-reliance on the State and City to provide accommodation / grant assistance are clear.

Increases in the high number of social grants are likely to result in a large segment of the population remaining in a low income bracket. At 3.5% of GDP, South Africa’s spending on social assistance is more than twice the median spending of 1.4% of GDP across developing and transition economies (World Bank 2009).

Residential Property Prices and Trends

Average nominal house prices in the various segments were as follows in December 2011, with nominal and real price changes presented below.

 Small homes (80m²-141m²): R694,400  Medium-sized homes (141m²-220m²): R985,400  Large homes (221m²-400m²): R1,548,200

Long term residential trends within the City have reflected changes in stand and unit size:

 The average stand size (m²) has decreased from 1,000m² in the early 1970’s to an average of 52m² at 2010 – illustrated on Figure 9.  The average unit size decreased from 215m² homes in the early 1970’s to an average of 170m² homes at present.

Figure 9: Long Term Average Residential Stand Size Trend

Source: Demacon Ex Commercial Banks, 2012

Figure 10: Average Building Size According to Building Year

Source: Demacon Ex Commercial Banks, 2012

Between 1985 and 1989, approximately 94.6% of homes valued were full-title homes. Since the 1990’s there has been an increased shift to sectional title as the preferred home choice – the 2010 figure for Full-Title was 75% - a reduction of 20% over a 20 year period. Factors that have contributed to this decline include: increasingly scarce, well located and associated costs of land; increased costs of services, rates and taxes; and perceptions pertaining to safety and security.

Figure 11: Proportion of full Title Properties – Long Term Trend

Source: Demacon Ex Commercial Banks, 2012

From the evident shift or trend towards sectional title housing, it is assumed that households appear to be more flexible to compromise on land / plot size than on house space. This led to an increase in the full title land utilisation rate (building size as % of stand covered) from 20% in 1965/69 to 32% at present.

Figure 12: Full Title Average Land Utilisation Rate

Source: Demacon Ex Commercial Banks, 2012

DWELLING HOUSES COMPLETED

Table 10: Residential buildings completed by size of dwelling house (City of Johannesburg Metropolitan Municipality) Year Smaller than 80sqm Equal to or larger than 80sqm Total dwelling houses 2004 1,039 2,768 3,807 2005 977 3,204 4,181 2006 1,927 3,318 5,245 2007 1,853 2,825 4,678 2008 3,205 3,085 6 290 2009 1,260 1,454 2,714 2010 721 1,001 1,714 Source: Demacon ex StatsSA

On average, a built residential area of 1,261,482m² was developed in Johannesburg Metropolitan municipality during the past 7 years (± 4,100 dwelling houses per annum). The development of dwelling houses (completed) declined drastically in 2009-2010 reflecting less than a third of the development activity in 2008.

FLATS AND TOWNHOUSES COMPLETED

Table 11: Flats and Townhouses Completed (Johannesburg Metropolitan Municipality) Dwelling-houses Completed Flats and Townhouses Completed Year Number of Units Total sqm Number of Units Total sqm 2004 3 807 755,489 4,065 581,169 2005 4,181 918,471 6,086 844,041 2006 9,562 1,464,161 3,298 692,485 2007 6,999 1,302,684 2,153 519,272 2008 3,059 504,010 180 45,950 2009 1,444 352,376 883 98,817 2010 1,714 350,413 347 45,056 Source: Demacon ex StatsSA

Figures 13 and 14 graphically illustrated the number of dwelling houses and flats and townhouses completed in 2010.

Figure 13: Dwelling Houses Completed

Source: Demacon ex StatsSA

Figure 14: Flats and Townhouses Completed

Source: Demacon ex StatsSA

On average, a total of 6,825 dwelling units / flats / townhouses are completed per annum in the City of Johannesburg. The most dwelling units were completed in 2006.