Merafong – Gauteng

Home , Carletonville, Elandsrand, Fochville, Khutsong, Oberholzer, R500 (South Africa)

Working for integration Mogale Bojanala District Rustenburg Municipality City Dr Kenneth Kaunda District Municipality Gauteng City of Johannesburg Metropolitan Randfontein Municipality

N14 City of Ventersdorp Johannesburg

West Rand District Municipality Westonaria Merafong City Midvaal

N12

Sedibeng District Tlokwe City Municipality Council Emfuleni

Ngwathe Sources:Metsimaholo Esri, USGS, NOAA

Merafong – Gauteng

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 15

10. Market Activity 22

11. Lending Activity 30

12. Leverage 34

13. Affordability Profile 37

14. Rental Index 41

15. Key Concepts 43

16. Source List 46

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 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 | Merafong Mining Town Housing Market 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 | Merafong 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 | Merafong Mining Town Housing Market 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 | Merafong 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:

• “Merafong City is situated about 65km from Johannesburg and is serviced by a number of major roads, including the N12 from Johannesburg to Cape Town and the N14” • “Biggest economic contributor to the District Municipality due to the mining sector”

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:

• “Merafong City has a population of 197,520” • “There was a -0,64% population growth between 2001 – 2011” • “In 2011, over 27,2% of the population was unemployed, and the dependency ratio was 37,9” • “The mining industry makes up the highest share of the GVA and employment market” • “There are 66,624 households in Rustenburg, with an average household size of 2,7 people” • “74,7% live in formal dwellings” • “81% of the households have flush toilets connected to a sewerage system, 52,9% piped water inside the dwelling, 74,9% weekly refuse removal and 82,8% electricity for lighting“

The Housing Development Agency | Merafong Mining Town Housing Market 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).

Merafong City is in the West Rand District of Gauteng. Merafong is one of the largest contributors in the mining sector in the West Rand District, where gold and uranium is mined. Gold Fields LTD Mining Company is where the majority of the gold is mined in the area.

4.1 Mining Industry Proﬁle

• The Merafong City mining activities have downscaled drastically since 2001 • The downscaling has led to nearly 75% of original workforce being retrenched in 2011 • The Merafong is still dominant in the mining sector and remains the biggest employer in the town • The Downward trend in mining employment highlights the need for diversification of the economic base

4.2 Housing in the Mining Sector

Due to 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 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. Understanding the housing options offered by the mining companies is an important factor in understanding local housing markets. 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.

Merafong is one of the biggest contributors to the mining sector in the West Rand District, where gold and uranium are the largest extractives. Gold Fields LTD Mining Company is the main operator in the area. Their Mine Housing Policies outline the following:

• Gold Fields offers a number of different housing options, ranging from housing allowances to houses built for employees • Gold Fields has eliminated hostels and unsustainable mine villages • Gold Fields pays industry leading “living-out allowances” (about R2000 per month) that offer employees with flexible housing options throughout the area

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

The municipality has identified the following challenges and opportunities from its 2014/2015 IDP:

5.1 Housing Challenges:

• “Request for more RDP houses” • “Housing backlog which, will continue to impact the future” • “Bulk Services not available” • “Low budgets for housing due to money allocated for other sectors, including mining”

5.2 Housing Strategies:

• “Housing projects to eradicate backlogs will create employment during construction phases” • “Increase construction of social housing to 80,000 a year” • “Develop spatial plans to include new housing” • “Municipality will participate in the identification of suitable land for social housing” • “Ensure capital budgets are appropriate for the new housing developments”

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

HDA Mining Town reports market coverage 6.1 Report Coverage Merafong City, Data by suburb of census and formal deeds registry data, 2013 It is important to keep in mind that Goudvlakte West SP these reports only cover the formal housing market, as captured by the Deeds Registry. Thus, there are four West Wits layers of information in the report: Khutsong South Bentley Park

Welverdiend AH Carletonville SP2 West-Driefontein Mine

West Village SP 1. Total StatsSA suburbs Doornfontein SP

Leeuport Mine Doornfontein Mine 2. Suburbs with residential properties 3. Suburbs with residential properties

Deelkraal Gold Mine SP sold Wedela Ext 3 4. Suburbs with residential properties Green Park SP sold with a bond

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 Merafong Housing Market Report Coverage residential housing market. This may help explain some of the maps, and Total Census Subplaces (SP’s) 62 why some suburbs are included and Total SP’s with registered residential 36 58% some may be omitted. For example, properties information on bonded sales will only reference suburbs in which bonded Total SP’s with sales 30 48% sales took place. Total SP’s with bonded sales 26 42%

Market Area by the Numbers Suburbs 62 Suburbs with residential properties 36 Households 66 622 Residential properties 22 662 Housing Backlog 14 217 Backlog as percent of all properties 62% Households to properties ratio 2.94 Average monthly income R 8 900 Average property value R 337 800 Average sales price R 530 000 Total residential value R 7.7 billion

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

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

The Merafong City housing market experienced growth in 2010 and 2012, and appears to be stable compared to other mining towns in the past year. This is a result of the mining industry growth in the surrounding towns, due to continued growth and expansion of the mining sector and jobs and the increasing urbanisation of previously undeveloped or rural areas within the municipality. The mining towns provide stable incomes, new housing investment and, in particular, a thriving housing market. Housing options are not currently diversely distributed across the municipality.

Merafong City’s affordability ratio of 2.3 is slightly below the mining town average of 2.8. Despite an average monthly income (R8 900), there remain large disparities among incomes and affordable housing access within the municipality. 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.

The presence of 35% 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. Average equity in these areas increase 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 cost acquisition loans.

The area has limited diversity and integration of housing values and property types, despite growth in some areas, which suggests a market that could be expanded to meet a wider range of needs and expectations. Formal mixed-income housing options that offer much-needed internal cross-subsidisation to keep prices affordable will likely do very well, and bodes well for a market less reliant on Government and mining intervention.

Merafong City has experienced a steady increase in non-traditional lenders. Lending by other lenders doubled from 2009 to 2011. With the presence of hundreds of RDP units, 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 their homes and allow owners to move up the housing continuum.

The opportunity for rental housing development within Merafong City is very strong within specific areas. Data indicates that 48% of households are renting; one of the highest levels of all towns studied. 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.

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

8.1 Key Findings: Housing Performance Index

The Merafong City housing market has experienced mostly slow levels of growth and a few scattered areas of stable and increased growth in the middle of town. The slow growth is likely due to stable and stagnant growth of the mining sector, and the increasing urbanisation of previously undeveloped or rural areas within the municipality.

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 slow but stable growth market in Merafong City, meeting housing demand will be a crucial factor in continued stabilisation of the town through this period of decrease. 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 them 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 divided by the total number of properties.

The Housing Development Agency | Merafong Mining Town Housing Market Report Housing Performance Index 8.3 The Housing Performance Merafong City, 2013 Market growth of six key housing market indicators, compared to the metro Index (HPI)

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 municipality as a whole. The housing performance index (HPI) provides a glimpse of the formal housing market only, and does not include

Sonderwater any demographic information. The weights were Waters Edge AH West Wits Carletonville Ext 10 determined by how well the indicator reflects Carletonville Central Welverdiend AH West-Driefontein Mine activity, increased investment and demand (and how reliably the indicator can be measured). Merafong City NU

Elandsrand Mine Wedela Ext 3 This information is useful in understanding Fochville SP Green Park SP how the formal market is behaving (which is Leeuwspruit SP 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 partners (developers or investors) seek and measure opportunity in order to better inform Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry. and coordinate Government planning processes Housing Performance Profile Growing and private sector motivation. Stable Slow Null “Growing” suburbs are areas which exceed the municipality’s rate of change in any four of six key market indicators. “Stable” areas meet or beat Housing Performance Index the municipality in at least three indicators, and Merafong City, 2013 Market growth profile by suburb, with property volume “Slow” areas are growing at rates less than the municipality in two (or fewer) of the six indicators. Sonderwater While an index provides quick understanding, West Wits it is important to look more closely at the Khutsong Ext 2 indicators themselves to understand more clearly Oberholzer Ext 1 Khutsong South the underlying factors affecting market growth Carletonville Ext 8 Carletonville Ext 4 Welverdiend AH Carletonville SP2 West-Driefontein Mine and stability.

CAHF Housing Performance Index Indicator Measured Implies Weight Merafong City NU Price Average sales Appreciation 25% price

Elandsrand Mine Value Average Appreciation 25% property Wedela Ext 3 value Fochville SP Transac- Number of Demand 15% Green Park SP tions sales

Leeuwspruit SP Percent Bonds per Investment 15% Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry. bonded sales Total Residential properties Housing Performance Profile 0 Growing Churn Repeat sales Activity 10% 2000 Stable 4000 Slow as a percent 6000 Null 8000 of total 10000 properties New New Growth 10% Properties properties added to the registry

The Housing Development Agency | Merafong Mining Town Housing Market Housing Performance Index Trends 5.5 5.0 6.5 8.4 Performance Over Merafong City, performance over time relative to the metro, 2007 -2013 Khutsong SP 2.5 5.5 2.5 Blybank Time 0.0 0.0 0.0 0.0 4.0 0.0 0.0 Kokosi Ext 1 1.0 0.0 0.0 0.0 0.0 Carletonville 5.0 5.0 Central 4.0 1.0 2.5 These charts provide the 3.5 Kokosi Ext 3 2.5 2.5 1.5 2.5 2.5 6.5 0.0 Housing Performance Index Carletonville Ext 1 4.0 5.0 4.0 5.0 2.5 Kokosi Ext 5 by suburb over time using the 0.0 1.0 1.0 1.0 6.5 1.0 5.0 0.0 Carletonville Ext 2 2.5 six key indicators (price and 1.5 4.0 5.0 5.0 0.0 Kokosi SP 3.5 1.0 value appreciation, sales and 6.5 6.5 2.5 1.0 6.5 Carletonville Ext 3 bonded sales, churn and new 0.0 0.0 2.5 Leeuwspruit SP 2.5 2.5 6.5 6.5 5.0 2.5 2.5 2.5 2.5 properties). Growth is relative Carletonville Ext 4 2.0 3.5 1.0 Merafong City NU to the municipality (and change 0.0 1.0 0.0 0.0 6.5 0.0 0.0 Carletonville Ext 5 3.5 from the preceding year), so 6.0 6.5 2.5 4.0 2.5 2.5 Oberholzer Ext 1 5.0 2.5 it is important to compare 2.5 3.5 Carletonville Ext 6 6.5 0.0 0.0 0.0 0.0 these lines to the area’s overall Oberholzer SP 4.0 0.0 0.0 4.0 2.5 6.5 2.5 3.5 performance, and the direction 5.0 6.5 Carletonville Ext 8 6.5 6.5 4.0 0.0 2.5 Pretoriusrus 5.0 in which the trends are headed. 4.0 6.5 2.5 1.5 5.0 6.5 Carletonville Ext 9 The city’s growth overall (above),

1.0 2.5 3.5 Sonderwater 0.0 0.0 0.0 0.0 as compared to the province, 6.5 0.0 0.0 Carletonville Ext 6.5 5.0 10 4.0 5.0 appears to be stabilising after Waters Edge AH 1.0 2.5 4.0 2.5 1.0 0.0 1.0 fluctuating for several years. Carletonville SP2 Wedela Ext 3 3.5 3.5 2.5 2.5 2.5 2.5 Elandsrand Mine While most areas are Wedela SP 5.5 8.0 5.0 5.0 2.5 experiencing slow or stable 6.0 4.0 5.0 6.5 Fochville SP growth, only a few housing 2.0 5.0 4.0 Welverdiend AH 0.0 0.0 0.0 1.0 0.0 0.0 markets grew in 2013 5.0 6.5 Green Park SP 4.0 4.0 4.0 6.5 compared to the prior year 2.5 2.5 2.5 Welverdiend SP 2.5 1.0 3.5 Khutsong Ext 2 (those places where the growth 2.5 2.5 2.5 2.5 2.5 2.5 West Wits profile score was greater in 2013 0.0 0.0 0.0 0.0 0.0 0.0 Khutsong Ext 3 4.0 than 2012). The contraction of 2.5 2.5 West-Driefontein 2.5 2.5 2.5 Mine 6.5 the mining sector may have Khutsong South 5.0 2008 2009 2010 2011 2012 2013 2.5 4.0 Source: Centre for Affordable Housing Finance in Africa, 2015. All indicators reflect formal market data as reflected on the deeds registry. created the overall market decline 2.5 2.5 Growth Profile in those specific subplaces. In considering development Housing Performance Index Trend investment over the long term, Merafong City, 2008 - 2013. stability of growth is often a 5,0 more important consideration Merafong City 5,0 when projecting future performance than high growth. Building housing opportunities 2008 2009 2010 2011 2012 2013 between areas of high and low Year growth can better integrate Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data housing markets overall. This as reflected on the deeds registry. information can help advice Municipality Growth Profile Grow how to create a more cohesive Slow and stable housing continuum, Stable with fewer spikes and drops, and where to begin.

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

The Housing Development Agency | Merafong Mining Town Housing Market Report Key Performance Indicators 8.5 Housing Performance Indicators Merafong City, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index R 530K Six indicators – price and value appreciation (top R 500K R 500K

)

) orange and blue lines), total sales and bonded sales R 400K R 393K R 400K (middle green bars and brown line), change in new

alue alue (blue R 300K R 338K R 300K e (orange properties and churn (bottom red and blue lines) – are R 259K the most telling of growing, active housing property R 200K R 200K

Sale Pric Property V Property markets. The relationship between indicators provides

Avg Avg Avg R 100K R 100K clues as to what may be driving performance, what R 0K R 0K that might mean for future development potential, 600 576 600 es and how it might affect or be influenced by different

green) 417 housing types, prices or target incomes. 404 402 ntial Sal 400 382 400

City 362 66%

ial Sales (

own)

(br

ed ed Reside These charts compare the performance of three

Merafong 200 200 50% 52% 52% ownership types, namely freehold, sectional title

l Resident 52% 44%

otal otal Bond

Tota T and estate ownership. The market appears to be 0 0 4,4% slowing down, consistent with most markets across 4% 4% the country. Despite rising average sales prices, the

es (red) es number of sales dropped dramatically in 2009. 3% 3% Sales have incrementally grown since. Bonded

Properti 2,1% 2% 2% rn (blue) 1,7%1,6% 1,7% sales, however, dropped from 66% of all sales in

1,5% Chu 1,3% 2008 (brown line) to 52% in 2013.

ge ge in New 1% 0,9% 0,8% 0,8% 1% 0,5%

Chan 0,3% 0% 0% Housing markets are very sensitive to access to credit, 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflect- so lending information will be helpful in understanding ed on the deeds registry. this more closely (see Lending below). Churn rates Key Indicators Avg Property Value have steadily dropped (blue line), indicating slower Avg Sales Price Total Residential Sales turnover of existing homes over time as well, except Total Bonded Residential Sales for sectional title properties. Change in new properties Change in New Properties Churn spiked in 2011, likely due to a new development in the freehold and sectional title housing markets.

Key Performance Indicators Merafong City, Freehold properties, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index R 523K R 500K R 500K

R 406K R 400K R 400K

e e (blue)

(orange) R 300K R 332K R 300K

perty Valu perty R 253K R 200K R 200K ale Price

Avg S Avg

Avg ProAvg R 100K R 100K

R 0K R 0K

503 s

n) 500 500

380 400 376 364 400 338 ntial Sale ales ales (gree 320

City

n) 300 66% 300

d Reside

(brow 200 200

Merafong

sidential S 50% 53% 52% 53% 44%

100 100 tal Bonde

Total Total Re

To 0 0

4,5% ed) 4% 4%

3% 3%

operties (r operties

(blue) 2,0% 2% 2% 1,6% 1,5% 1,6% 1,4% Churn in New Pr 1,2% 1% 1% 0,9% Change Change 0,8% 0,7% 0,6% 0% 0,1% 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 | Merafong Mining Town Housing Market Key Performance Indicators 8.6 Housing Performance Indicators by Merafong City, Sectional Title properties, 2008 - 2013 Change over time of the six key indicators within the Housing Performance Index Property Type R 500K R 490K R 500K R 421K R 453K R 400K R 400K Different housing markets perform in different ways,

R 409K nge) e e (blue) including freehold (free-standing) homes and sectional R 300K R 300K

rice rice (ora title (subunits within a single property). The area is perty Valu perty R 200K R 200K predominantly freehold (see Market Size below).

vg vg Sale P

Avg ProAvg R 100K R 100K

R 0K R 0K There is a small sectional title and estate property 30 30 27 27 market, which combined represents less than 10% n) 26 25 22 22 Sales of all sales in the town. Sectional title sales have

ty 20 20 ales ales (gree mostly been in the same range over the years, however sidential bonded sales have dropped from 54% in 2008 to 30% 54% (brown)

erafong Ci erafong

M sidential S 10 44% 10 in 2013. Maps below indicate sectional title and estate

44% 50% onded Re 30% 32% property markets have been concentrated in a few

Total Total Re

Total Total B 0 0 areas in the centre of town. Churn (the blue line) has 6% 6,0% 5,9% 6% 5,3% 5,3% been increasing since 2009, while change in sales has ed) 4,9% 4,6% been up and down for most years.

4% 4% e)

operties (r operties 3,3% 3,2% 3,1% Overall, the number of estate sales has been

hurn (blu

2% 2% C in New Pr 2,3% decreasing over the period of 2008 – 2013, likely due to the completed sales of the development.

Change Change 0% 0,0% 0,0% 0% Average sales prices (orange line) for estate properties 2008 2009 2010 2011 2012 2013 have tripled from 2008 to 2013, however residential Source: SA Deeds Registry from Lightstone. All indicators reflect formal market data as reflected on the deeds registry. sales (green bars) have declined at a similar rate from Key Indicators Avg Property Value 2008 to 2013. Even though the market is small, Avg Sales Price bonded sales (brown line) have increased from 37% Total Residential Sales Total Bonded Residential Sales in 2009 to 73% in 2013. Since 2011, churn rates have Change in New Properties Churn been steadily increasing, indicating high turnover, which is positive for the estate market.

Key Performance Indicators Merafong City, Estate properties, 2008 - 2013 Lending is instrumental in the growth of housing Change over time of the six key indicators within the Housing Performance Index markets, and the ability to access bonds to buy R 821K R 800K R 800K sectional title houses has driven the growth of this R 764K R 651K housing type. Sectional title is also an important R 600K R 600K ange)

lue (blue) affordable homeownership option.

R 400K R 400K Price (or

roperty Va roperty

R 200K R 244K R 200K

Avg SaleAvg

Avg P Avg

R 0K R 0K 50 47 50

ales

reen) 40 40

30 30 idential S l Sales (g 68%

fong fong City

(brown) 20 19 20

Mera 15 15 nded Res

Residentia 11 10 10 6 73%

Total Total 60% 37% 55% Total Bo 0 50% 0

26,5%

(red) 20% 20%

13,5% lue)

Properties 10,3% 10% 9,0% 10% 6,4% 7,1% Churn (b

e e in New 3,8% 5,4%

Chang 0% 0,0% 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 14

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

9.1 Market Size: Key Findings

Merafong’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 highly segregated between upper-priced, actively selling private growing markets near the city centre, and further flung lower income, non-bonded Government-sponsored developments and informal settlements (not on the deeds registry).

The implied demand for housing is extremely high. The current estimated housing backlog represents about 62% of the town’s current total formal residential properties. 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.

9.2 Policy Implications

Governments 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 then used to purchase new housing further up the housing continuum. For example, Governments 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.

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 to housing markets over the longer term.

The Housing Development Agency | Merafong Mining Town Housing Market 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 Online 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 | Merafong Mining Town Housing Market Report 9.4 Market Size and Distribution of Properties and Values by Suburb Merafong City, 2013 Government Investment Formal residential properties, informal settlements and mines, by suburb 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

Sonderwater impact of proposed developments on the surrounding area. It can also show Khutsong Ext 3 Waters Edge AH Carletonville Ext 10 Blybank the impact of Government investment Khutsong SP West Wits Khutsong Ext 2 in housing markets. Comparing the Carletonville Ext 6 Welverdiend AH Khutsong South Carletonville Central distribution of values to the housing Carletonville Ext 8 performance map, several moderate Welverdiend SP Carletonville SP2 West-Driefontein Mine income areas are growing faster than the municipality.

Merafong City NU In Merafong City, properties with lower

Wedela SP values are concentrated in the south and north-west of town, between Fochville SP Wedela Ext 3 transit corridors and coincide with Kokosi SP Kokosi Ext 3 Government investment in housing Green Park SP (left map). It is a very positive fact that Kokosi Ext 1 Kokosi Ext 5 Leeuwspruit SP so many Government-sponsored housing units are on the deeds Source: South African deeds registry via Lightstone (Pty), Ltd; Housing Development Agency informal settlements and mines. registry. However, often these homes Number of Residential properties Type Affordability are undervalued for two reasons. The 0 15 000 Informal Settlement Under R250k 5 000 Mines Between R250k - R500k subsidy value was often noted as the 10 000 Between R500k - R1.2m Over R1.2m sales price (rather than the cost), or sales prices are driven low because

Number and Percent Government Sponsored Residential Properties buyers lack access to credit with which Merafong City, by total residential properties per suburb, 2013 to purchase the homes at a more realistic sales price, and must pay with Sonderwater the cash they have. Blybank West Wits Waters Edge AH Khutsong Ext 2 Encouraging the resale of Carletonville Ext 6 Oberholzer Ext 1 Government-sponsored housing is Khutsong South an important means of expanding Carletonville Ext 8 Carletonville Ext 4 housing options – for the sellers, who Welverdiend AH Carletonville SP2 West-Driefontein Mine can move up the ladder with the equity from the sale of their property (see below), to the first time homebuyer purchasing the existing home. More

Merafong City NU activity in these markets will also raise the value of the home, often a family’s most valuable asset.

Elandsrand Mine

Wedela Ext 3

Fochville SP

Green Park SP

Leeuwspruit SP

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

Total Residential properties % Govt Sponsored 0 0% 30% 2000 4000 6000 8000 10000

The Housing Development Agency | Merafong Mining Town Housing Market Market Size: Total Properties by Property Value Segment 9.5 Market Size by Value Merafong City, 2013 Sorted by suburb, by property value Segment Khutsong SP 1 034 3 258 Khutsong South 2 575 These charts provide the total

Fochville SP 210 1 841 9 properties within each suburb by Wedela SP 492 1 236 property value segment (below Kokosi Ext 3 1 520 R250 000, which includes most of Wedela Ext 3 1 083 the Government-sponsored housing); Kokosi Ext 1 122 892 between R250 000 - R500 000; Leeuwspruit SP 978 between R500 000 and R1.2 million Kokosi Ext 5 913 and over R1.2 million). Merafong City Khutsong Ext 3 727 has a variety of property values in many Welverdiend SP 589 129 suburbs, however most suburbs have Oberholzer SP 634 one segment that is dominant. In Khutsong Ext 2 536 small housing markets, Government Carletonville Ext 8 510 interventions and programmes must Oberholzer Ext 1 429 be more targeted, as their impact on Green Park SP 423 the market overall will be greater. Kokosi SP 215 The closing of some mines and the Carletonville Central 278 contraction of the mining sector in the Carletonville Ext 1 281 area has created the market decline Carletonville Ext 4 228 indicated in the index trends above. Carletonville Ext 9 208 Pretoriusrus 184 A diverse approach to housing options Blybank 156 may help to expand the diversity and Carletonville Ext 3 distribution of housing across town. Carletonville Ext 5 Carletonville Ext 2

Carletonville Ext 10

West Wits 37 Waters Edge AH

Merafong City NU Welverdiend AH

Carletonville Ext 6

Sonderwater 3 Carletonville SP2

West-Driefontein Mine 0 Elandsrand Mine 0 1 000 2 000 3 000 4 000 5 000 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 | Merafong Mining Town Housing Market Report Market Size: Total Properties by Property Type 9.6 Market Size by Property Type Merafong City, 2013 Freehold, Sectional Title and Estate properties Khutsong SP 4 330 Merafong City’s residential properties Khutsong South 2 576 Fochville SP 149 1 843 are predominantly freehold, with some Wedela SP 1 739 sectional title and estate properties making Kokosi Ext 3 1 520

Wedela Ext 3 1 083 up less than 10% of the market. All are Kokosi Ext 1 1 014 located in the north of town, highlighting Leeuwspruit SP 978 an opportunity for diversification of Kokosi Ext 5 913 Khutsong Ext 3 727 property types.

Welverdiend SP 700 Oberholzer SP 637 Sometimes sectional title ownership Khutsong Ext 2 536

Carletonville Ext 8 509 can present affordable housing options Oberholzer Ext 1 434 through shared costs of living space and Green Park SP 427 convenient locations. Kokosi SP 402

Carletonville Central 280 Carletonville Ext 1 263

Carletonville Ext 4 229 Carletonville Ext 9 214 Pretoriusrus 184 Blybank 163

Carletonville Ext 3 113

Carletonville Ext 5 85

Carletonville Ext 2 56

Carletonville Ext 10 37 West Wits 37 Waters Edge AH 34 Merafong City NU 17

Welverdiend AH 9

Carletonville Ext 6 5

Sonderwater 3

Carletonville SP2 0

West-Driefontein Mine 0

Elandsrand Mine 0 0 400 800 1200 1600 2000 2400 2800 3200 3600 4000 4400 Total Residential Properties Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. Property Type Description Freehold Estate Sectional Title

Distribution of Properties types by Suburb Merafong City, by total residential properties per suburb, 2013

Sonderwater

West Wits Khutsong Ext 3 Waters Edge AH Khutsong Ext 2 Pretoriusrus Oberholzer SP

Carletonville Ext 9 Carletonville Central

Carletonville Ext 8 West-Driefontein Mine Welverdiend AH

Merafong City NU

Elandsrand Mine

Wedela SP Wedela Ext 3

Fochville SP

Fochville SP Green Park SP

Kokosi Ext 1

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

Total Residential properties Property Type Description 0 Estate 2000 Freehold 4000 Sectional Title 6000 8000 10000

The Housing Development Agency | Merafong Mining Town Housing Market Market Size: Households, Properties and Income 9.7 Market Size by Merafong City, 2013 Total households, renting, total properties, household to property ratio and average monthly income by suburb Households and Income Households Renting (Grey)

0K 5K 10K Understanding the distribution 28% Khutsong SP 9 328 4 330 2,2 R 4,1K of households and incomes 64% Wedela SP 4 578 1 739 2,6 R 6,0K within Merafong City helps 22% to inform scale, development Khutsong South 4 124 2 576 1,6 R 3,4K 49% impact, and programme targets. Fochville SP 3 118 2 148 1,5 R 21,7K

Kokosi Ext 3 32% 1 520 1,4 R 3,8K 2 102 Census data is useful as the 29% Merafong City NU 1 921 17 113,0 R 6,1K only source of demographic 49% Wedela Ext 3 1 721 1 083 1,6 R 3,8K information consistently 38% Kokosi Ext 5 1 412 913 1,5 R 2,6K available at the suburb level, and 64% Carletonville Ext 1 1 359 314 4,3 R 10,5K provides interesting insights into 24% Kokosi Ext 1 1 208 1 014 1,2 R 9,6K local differences. 49% Blybank 1 196 163 7,3 R 6,1K 36% Areas with high levels of renters Khutsong Ext 3 1 185 727 1,6 R 2,9K (grey bars) also very often Leeuwspruit SP 25% 978 1,2 R 3,5K 1 134 have the highest household Carletonville Ext 8 47% 516 2,2 R 19,0K 1 117 incomes (such as Fochville and 32% Oberholzer SP 1 060 665 1,6 R 14,7K Carletonville Ext 4), however, 10% Sonderwater 997 3 332,3 R 1,6K this is only true for some 72% Carletonville Ext 4 904 247 3,7 R 19,0K subplaces. It is suggested that 71% Carletonville Central 851 326 2,6 R 14,1K these high levels of renters 42% Kokosi SP 837 402 2,1 R 8,2K might be the combination of 37% Welverdiend SP 833 718 1,2 R 12,6K higher income executives who 64% rent (instead of own) as well as Carletonville Ext 9 814 245 3,3 R 15,8K 31% support staff who rent nearby Khutsong Ext 2 775 536 1,4 R 3,1K in backyard accommodation. West-Driefontein Mine 20% 0 R 6,0K 728 While this generates important 84% Carletonville Ext 3 575 113 5,1 R 13,5K income to the owners, the 25% Oberholzer Ext 1 547 475 1,2 R 27,1K creation of quality, affordable 79% Carletonville Ext 5 542 85 6,4 R 16,2K rental housing in those areas 37% Green Park SP 541 427 1,3 R 4,0K can help to address some of the 19% Waters Edge AH 329 34 9,7 R 4,6K housing backlog quickly. 26% Pretoriusrus 218 187 1,2 R 21,9K 74% Areas with above average Carletonville Ext 2 206 56 3,7 R 10,5K renters and moderate incomes Carletonville Ext 10 61% 54 2,9 R 13,4K 157 (Wedela SP and Blybank) might Welverdiend AH 56% 9 2,8 R 15,3K 25 mean families which are ready 109% Elandsrand Mine 22 0 R 2,1K for more formal rental options. 100% Carletonville Ext 6 4 5 0,8 R 5,1K 0% Carletonville SP2 4 0 R 1,3K Ratios of households (from West Wits 37 0,0 R 0,0K 0 Avg =630 Avg= R 9,3K StatsSA) to properties (from 0K 5K 10K 0K 2K 4K 0 100 200 300 400 R 0,0K R 30,0K the deeds registry) – the red Total Residential Total Households Properties HHs to Properties Ratio Avg monthly HH income bar - can show degrees of 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. limited supply or informality. The informal settlements in Sonderwater and Merafong City NU have high populations, few registered properties and low incomes.

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

10.1 Key Findings

Sales of units are concentrated in northern suburbs mostly in upper income areas. Sales dropped across the country after 2008, however, in Merafong City, they have picked up slowly afterwards, and mostly in higher priced housing.

Bonded sales in lower markets are a 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 significantly 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.

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 portion 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 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 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 | Merafong Mining Town Housing Market 10.4 Sales and Bonded Sales by Property Value Segments

In 2013, about 86% of all residential sales and 90% of bonded sales in Merafong City have been over R500 000 (the red and orange sections). Market share (the portion of the total) by property value segment has changed since 2008, suggesting an evolving housing market. The relationship between sales and bonds shows 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 dropped over time, from 13% of all sales in 2008 to 5% in 2013. 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 which 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 Merafong City, 2008 - 2013 Merafong City, 2008 - 2013 All residential sales All residential sales 600

7% 550 9% 350 6% 500 6%

300 450

400 s 14% 13% 11% 250

350 7% Sale ial Sales 5% 6% 25% 9% 7%

sident 2% 4% 3% ential ential 300 200 7% 2% 5% 1%

ed Re ed 4% 9% 81% l Resid l 79% 250 4% 7%

Tota al Bond al 150

200 Tot 75% 74% 69% 75% 84% 79% 80% 78% 150 100 59% 76%

100 50 50

17% 8% 8% 9% 11% 6% 13% 11% 10% 13% 0 5% 7% 0 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal mar- Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. ket data as reflected on the deeds registry. Property Value Segment Property Value Segment Under R250k Under R250k Between R250k - R500k Between R250k - R500k Between R500k - R1.2M Between R500k - R1.2M Over R1.2M Over R1.2M

The Housing Development Agency | Merafong Mining Town Housing Market Report 10.5 Lending per Property Percent of Sales Bonded by Value Segment Merafong City, All residential sales, 2008 - 2013 Value Segments 82% This chart shows (by contrast to the 80% 80% previous charts) the percent of bonded sales within the various property value segments. Overall, the total sales receiving bonds in Merafong 70% 67% City went down over the past six 63% years, but the drop was not evenly experienced. The lowest property 60% values (the green line) experienced

d the greatest drop in bonded sales 54% since 2008, perhaps due to lack of 50%

Bonde 46% access to credit, or decreased supply of housing that falls within this segment.

Sales The higher (red line) property value 40% segment, however, is the only one which experienced an extremely small

cent of cent increased level of bonds in the past Per 30% year, perhaps due to new housing, which likely fits into this price range. 27%

20% The upper tiered properties more closely reflect the activity of overall bonded sales rates across the 10% country. Lower middle (blue line) 8% bonded sales experienced high spikes counter to the other property segments 0% since 2008, and currently appear to 2008 2009 2010 2011 2012 2013 have a reduction in bonding. Increasing Year access to bonds increases sales activity.

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

The Housing Development Agency | Merafong Mining Town Housing Market Sales by Property Value Segments 10.6 Sales by Property Value Merafong City, by suburb, 2013 Segments

Sonderwater

Khutsong SP This map shows the volume of West Wits Khutsong Ext 3 Waters Edge AH sales activity (the size of the dot) Khutsong Ext 2 Carletonville Ext 10 by suburb across the town, by Oberholzer Ext 1 Carletonville Ext 5 Khutsong South Carletonville Central property value segments (slices of

Carletonville Ext 9 Carletonville Ext 4 the pie). Most sales took place in the Welverdiend AH Carletonville SP2 West-Driefontein Mine north and surrounds. The upper middle valued properties (in the orange) saw most activity, but lower-priced homes (green) also saw registered sales activity, a potential sign of active (increased) Merafong City NU supply and steady demand.

Access to credit is a significant boost Elandsrand Mine or barrier to housing market growth. Wedela SP Wedela Ext 3 While some suburbs offer a range of housing price options; pinpointing Fochville SP product prices and types to specific Kokosi SP Green Park S areas, especially considering local Kokosi Ext 3 Leeuwspruit SP affordability; is key to ensuring programme success.

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

Total Residential Sales Property Value Segment 0 Under R250k 50 Between R250k - R500k 100 Between R500k - R1.2m 150 Over R1.2m 200 250

The Housing Development Agency | Merafong Mining Town Housing Market Report Total Sales by Sales Type 10.7 Sales by New and Merafong City, 2013 Repeat Sales New and repeat sales 0 Blybank 0 An important distinction in market 7 Carletonville Central performance is the sale of new homes 0 10 (which have never appeared on the Carletonville Ext 1 0 deeds registry) and the resale of existing 1 Carletonville Ext 2 homes. The chart shows new (green) 1 4 and repeat sales (orange) by suburb. In Carletonville Ext 3 0 most mining towns, new registrations 8 Carletonville Ext 4 0 are clustered in only a few suburbs. 1 Carletonville Ext 5 The few new sales in Merafong City 0 0 appear to be very concentrated within Carletonville Ext 6 0 the Fochville SP area. Being one of the 20 Carletonville Ext 8 oldest suburbs in the town, Fochville is 0 13 clearly experiencing more repeat sales Carletonville Ext 9 0 than the rest. 1 Carletonville Ext 10 0 Carletonville SP2 New sales can also show the recent registration of Government-sponsored Elandsrand Mine housing investment. An important 158 Fochville SP point is to recognise the impact 13 1 of newly registered Government Green Park SP 0 investment in housing. Often these Khutsong Ext 2 registrations may be perceived as a Khutsong Ext 3 market distortion, but the deeds issued

1 on Government-sponsored housing Khutsong South 0 represent real assets, which now can 9 Khutsong SP be traded and loaned against and are 0 key to moving up the housing ladder. Kokosi Ext 1 Thus, the housing market has in fact Kokosi Ext 3 grown. Kokosi Ext 5 Suburbs with no data reﬂect areas with no Kokosi SP sales or new registrations. 1 Leeuwspruit SP 0 0 Merafong City NU 1 30 Oberholzer Ext 1 1 23 Oberholzer SP 1 4 Pretoriusrus 1 Sonderwater

2 Waters Edge AH 0 Wedela Ext 3

14 Wedela SP 2 Welverdiend AH

34 Welverdiend SP 0 West Wits

West-Driefontein Mine

0 20 40 60 80 100 120 140 160 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 | Merafong Mining Town Housing Market 10.8 Market Activity amongst New Homes and Repeat Sales

The growth and maturity of housing markets can often be found by comparing new homes and resales over time. The growth of existing home sales (the orange line) indicates sustained interest of housing markets by borrowers and lenders. The thicker lines reflect areas with more sales.

Often volumes of new homes in prior years become resales in later years (for example, Fochville’s steady increase of resales since 2009). Understanding how mining companies create new units helps to understand their existing and potential contribution to expanding the local housing economy.

18 17 11 8 Khutsong SP 9 9 0 1 Sales Trends by Sales Type 2 4 5 Merafong City, 2008 - 2013 0 New and Repeat Sales 1 1 1 1 1 1 Kokosi Ext 1 0 0 0 0 Blybank 0 0 0 0 0 2

22 Kokosi Ext 3 1 1 14 13 0 Carletonville Central 0 0 11 11 7 0 0 1 0 0 0 23 Kokosi Ext 5 14 12 Carletonville Ext 1 12 10 18 1 0 0 4 0 0 4 2 3 5 Kokosi SP 2 0 2 Carletonville Ext 2 0 0 0 0 0 0 1 1 1 1 0 1

4 Leeuwspruit SP 0 5 4 3 Carletonville Ext 3 3 0 02 0 0 0 0 1 1 17 13 12 Merafong City NU 0 0

Carletonville Ext 4 8 9 9 0 0 0 0 4842 0 0 30 32 30 6 Oberholzer Ext 1 4 27 22 Carletonville Ext 5 3 5 2 3 2 3 3 1 0 0 0 0 0 10 32 32 34 23 Oberholzer SP 25 17 1 0 0 Carletonville Ext 6 0 0 0 0 0 0 0 0 1

13 14 15 20 20 Pretoriusrus 10 19 19 16 6 4 Carletonville Ext 8 0 0 0 0 12 0 1 2 1 0 0 0 0 17 12 Sonderwater 10 13 Carletonville Ext 9 9 7 2 0 0 0 0 0 3 2 5 Waters Edge AH 1 1 3 0 0 Carletonville Ext 10 0 0

02 02 02 0 1 0 0 1

Wedela Ext 3 0

Carletonville SP2

42 33 32 27 27 27 Wedela SP 25 19 14 Elandsrand Mine 15 8 2

134 158 147 Welverdiend AH 0 150 151 Fochville SP 25 58 93 14 13 47 38 13 32 34 5 Welverdiend SP 32 25 20 Green Park SP 0 0 0 0 3 0 0 0 1 1 1 0 0 0 0

1 West Wits

Khutsong Ext 2 0

West-Driefontein Mine 2

Khutsong Ext 3 1

0 0 2008 2009 2010 2011 2012 2013 Year

2 2 Sales Type Khutsong South 1 1 Total New Sales 1 Total Repeat Sales 0 0 0 0 0

The Housing Development Agency | Merafong 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.

Welverdiend SP is one of five areas which experienced an increase in sales and bonds from 2012 to 2013. Fochville had the highest number in total residential sales and total bonded sales, however, the percent change in sales and bonded sales was not high compared to Welverdiend, suggesting a possible shift in the market. All other areas experienced a drop.

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

Market Activity: Total Sales and Change in Sales Merafong City, 2012 - 2013 Change in residential and bonded sales Blybank 0 0

Carletonville Central -55% 4 -100%

Carletonville Ext 1 8 100% -60% Carletonville Ext 2 -50% -100%

Carletonville Ext 3 4 33% 3 200%

Carletonville Ext 4 6 -54% 4 -43% Carletonville Ext 5 1 -83% 1 -80% Carletonville Ext 6

Carletonville Ext 8 20 67% 11 57%

Carletonville Ext 9 10 8 100%

Carletonville Ext 10 1 -67% 1 0% Fochville SP 32133 5 26 76 -75%

Green Park SP 1 0% 0

Khutsong South 1 -50% 0 Khutsong SP 7 -71% 40% -50%

Leeuwspruit SP 1 0 Merafong City NU 1 0

Oberholzer Ext 1 30 -50% 12 -50%

Oberholzer SP 21 -36% 11 -58% Pretoriusrus 5 -17% 2 -33% Waters Edge AH -67% -50%

Wedela SP 12 -61% -50% -83% Welverdiend SP 27 7 250% 12 4 300% 0 50 100 150 -100% 0% 100% 200% 0 20 40 60 80 100 -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 | Merafong Mining Town Housing Market Market Activity: Total Sales and Change from previous year 10.10 Change in New and Merafong City, 2012 - 2013 Change in new and repeat sales Repeat Sales

Blybank 0 -100% 0

Carletonville Central 7 -46% 0 This chart shows the specific rate of activity of new and repeat Carletonville Ext 1 10 -17% 0 -100% sales from 2012 to 2013. As seen Carletonville Ext 2 1 -50% 1 before, new sales and resales were Carletonville Ext 3 4 33% 0 concentrated in Fochville SP. Carletonville Ext 4 8 -38% 0 Carletonville Ext 5 1 -83% 0 Many of the developments built by the Carletonville Ext 6 0 0 Government are heading into their 8th Carletonville Ext 8 20 67% 0 year, and become eligible for resale by Carletonville Ext 9 13 8% 0 their owners. By understanding when Carletonville Ext 10 1 -67% 0 those units come Online for resale, Carletonville SP2 Government can align policies that

Elandsrand Mine encourage sale and development

Fochville SP 158 5% 13 0% nearby, which can help leverage that prior investment, expand Green Park SP 1 0% 0 housing options and stimulate Khutsong Ext 2 movement up the next rung up Khutsong Ext 3 -100% the housing ladder. Resales are Khutsong South 1 -50% 0 an important means of recycling Khutsong SP 9 -18% 0 -100% existing homes to make more housing Kokosi Ext 1 -100% options available. Kokosi Ext 3 Kokosi Ext 5 Suburbs with no information had no

Kokosi SP -100% residential sales in the past two years.

Leeuwspruit SP 1 0

Merafong City NU 0 1

Oberholzer Ext 1 30 11% 1 -50%

Oberholzer SP 23 -32% 1

Pretoriusrus 4 -33% 1

Sonderwater

Waters Edge AH 2 -33% 0

Wedela Ext 3

Wedela SP 14 -48% 2 -75%

Welverdiend AH

Welverdiend SP 34 6% 0

West Wits

West-Driefontein Mine

0 50 100 150 -100% 0% 100% 0 5 10 15 -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 | Merafong Mining Town Housing Market Report 10.11 Average Property Values and Market Activity: Average Property Values and Sales Prices Merafong City, 2007 - 2013 Sales Price Property value and sales price by suburb R 942K R 735K Blybank The relationship between local sales prices (orange lines) and average property values (blue lines) can R 28K R 25K R 664K tell much about the activity and integration of R 522K Carletonville Central R 468K R 510K supply and demand. Every house in a suburb has a value, determined by the number of sales, changes R 565K R 580K R 450K in prices, churn (repeat sales) and other factors Carletonville Ext 1 R 418K 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. R 2 932K Carletonville Ext 2 R 2 288K R 2 480K R 1 488K As markets formalise and strengthen, these R 667K trends inform each other more effectively, and R 520K R 580K Carletonville Ext 3 R 437K the trend lines become almost parallel over time

R 674K (such as Fochville, Carltonville Central and parts of R 528K R 661K Wedela SP). Sales prices within Green Park SP and Carletonville Ext 4 R 489K Carletonville Ext 3 actually surpassed their property value in 2009. R 618K R 734K R 573K R 700K Carletonville Ext 5 Sales in many areas of Merafong City have been R 754K steady and values are rising in some areas, R 588K Carletonville Ext 6 indicating steady, active markets. Rising sales prices in affordable areas can reflect improved

R 571K R 670K access to credit, as well as increasing interest in R 517K R 662K Carletonville Ext 8 the neighbourhood.

R 795K R 870K R 680K R 839K Carletonville Ext 9

R 1 100K R 798K Carletonville Ext 10 R 631K R 472K

Carletonville SP2

Elandsrand Mine

R 832K R 658K Fochville SP R 594K R 410K

R 128K R 84K Green Park SP R 45K R 30K R 219K R 144K Khutsong Ext 2

R 18K R 218K

R 143K Khutsong Ext 3

R 65K R 40K R 90K

R 59K Khutsong South R 45K R 35K

R 217K

R 143K Khutsong SP R 110K R 111K

R 159K R 124K Kokosi Ext 1 R 60K R 35K R 149K 29

The Housing Development Agency | Merafong Mining Town Housing Market R 35K R 149K R 109K Kokosi Ext 3

R 20K R 35K R 151K R 117K Kokosi Ext 5

R 238K R 169K Kokosi SP

R 90K R 76K R 147K R 101K Leeuwspruit SP

R 40K R 215K R 167K Merafong City NU

R 50K R 55K R 719K R 558K Oberholzer Ext 1 R 411K R 226K R 712K R 556K R 579K Oberholzer SP R 529K

R 719K R 558K R 598K Pretoriusrus R 476K

R 226K R 176K Sonderwater

R 1 302K R R1 0071 220K K R 1 138K Waters Edge AH

R 175K R 114K Wedela Ext 3

R 40K R 197K

R 130K Wedela SP

R 85K R 71K

R 443K R 346K Welverdiend AH

R 573K R 448K Welverdiend SP R 374K R 314K

R 988K R 771K West Wits

West-Driefontein Mine

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. Measure Names Avg Property Value Avg Sales Price

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

11.1 Key Findings

Lending is highly concentrated in Merafong by area and loan size. Bonded sales are almost entirely concentrated in housing and sales over R500 000, with those loans concentrated in the north of the city’s higher priced housing markets. While the share of lending by each of the four major banks in the country has remained consistent, lending from non-traditional lenders fluctuated, as the data indicates that lending by other lenders doubled from 2009 to 2011, perhaps due to expanded lending 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. Existing lenders should take lower incomes into account by reducing finance costs.

Loans to entice the development of more middle-market housing would create more integrated markets.

Programmes should make creative finance 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

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 | Merafong Mining Town Housing Market All Loans by Lender 11.4 Lending Over Time Merafong City, 2008 - 2013 Total value of residential bonds by lender R 2 200M Loan data taken from the deeds registry can provide lending activity by R 2 000M lender, which has grown consistently in

R 1 800M the area. By comparing the top chart R 805M (all loans held by each lender) to the R 1 600M R 764M bottom chart (lending activity by lender R 720M per year), it is possible to note that while R 1 400M R 699M

onds the lending in the area has consistently R 668M R 642M R 1 200M grown, the amount per year varies R 339M from lender to lender. For example, sidential B sidential R 320M R 1 000M R 307M annual lending decreased considerably R 294M from 2008 to 2009 amongst most alue of Re of alue R 284M V R 800M R 272M R 328M R 317M lenders. Of note has been the infusion R 309M R 600M R 300M of other lenders into the area. Lending R 286M R 273M by other lenders doubled from 2009 R 400M R 469M R 434M to 2011. These other lenders primarily R 389M R 334M include companies providing home R 302M R 200M R 291M loan benefits to their employees. R 140M R 151M R 168M R 0M R 78M R 90M R 116M 2008 2009 2010 2011 2012 2013 The following charts explore lending Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. Banks by bank and by suburb to understand ABSA FNB specifically where bank investment has Nedbank been made by suburb, and what that Standard Bank SA Other Lenders may mean about financing availability for various development sites and scenarios.

New Loans by Lender Merafong City, 2008 - 2013 Total value of residential bonds by lender R 200M

R 180M

R 49M

R 160M

R 140M

R 120M R 50M

R 21M

R 41M R 100M R 44M R 31M R 13M

R 9M R 80M R 10M R 19M R 45M R 14M R 14M R 26M R 60M R 9M R 10M R 55M

R 12M R 40M R 32M R 36M R 44M R 14M R 42M

R 20M R 11M R 26M R 24M R 17M R 12M R 10M R 0M R 7M 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 | Merafong 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). In the top map, a few areas, Welverdiend AH, Merafong City NU and Green Park SP have bonds from several lenders, yet there is no lending at all in 2013.

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 0 R 0 Khutsong SP 2008 R 0 R 0 R 1,312,390 R 0 R 46,000 2009 R 0 R 453,836 R 388,814 R 0 R 326,551 2010 R 0 R 330,000 R 182,166 R 0 R 140,000 New Loans by Lender 2011 R 0 R 90,000 R 0 R 0 R 0 2012 R 0 R 540,000 R 0 R 0 R 0 Merafong City, 2008 - 2013 2013 R 192,000 R 0 R 0 R 0 R 0 The value of new bonds by lender by suburb over time Kokosi Ext 1 2008 R 0 R 0 R 40,000 R 0 Merafong City 2009 R 0 R 0 R 0 R 0 Standard Other ABSA FNB Nedbank 2010 R 0 R 0 R 0 R 175,000 Bank Lenders 2011 R 0 R 0 R 0 R 0 Carletonville 2008 R 367,700 R 1,818,000 R 1,091,305 R 4,414,000 R 0 2012 R 0 R 0 R 0 R 0 Central 2009 R 0 R 360,000 R 0 R 800,000 R 620,000 2013 R 0 R 0 R 0 R 0 2010 R 0 R 0 R 440,626 R 2,530,000 R 0 Kokosi Ext 3 2008 R 0 R 0 R 0 2011 R 0 R 0 R 303,192 R 1,670,700 R 460,000 2009 R 0 R 0 R 0 2012 R 550,000 R 380,000 R 0 R 1,610,700 R 650,000 2010 R 0 R 0 R 900,000 2013 R 0 R 0 R 0 R 1,506,000 R 0 2011 R 0 R 0 R 0 Carletonville 2008 R 2,151,400 R 360,000 R 1,259,381 R 3,457,100 R 700,000 2012 R 0 R 0 R 0 Ext 1 2009 R 580,600 R 1,032,000 R 0 R 0 R 53,000 2013 R 0 R 0 R 0 2010 R 751,500 R 0 R 0 R 1,816,000 R 610,000 Kokosi SP 2008 R 0 R 180,000 R 150,000 R 0 R 0 2011 R 224,000 R 500,000 R 404,332 R 1,766,000 R 530,000 2009 R 0 R 0 R 0 R 0 R 0 2012 R 410,000 R 0 R 374,093 R 950,000 R 600,000 2010 R 180,000 R 0 R 182,064 R 0 R 0 2013 R 1,405,000 R 91,000 R 0 R 0 R 0 2011 R 0 R 170,000 R 0 R 200,000 R 0 Carletonville 2008 R 2,185,215 R 0 R 0 R 4,754,000 R 0 2012 R 0 R 0 R 0 R 0 R 0 Ext 2 2009 R 0 R 0 R 0 R 0 R 0 2013 R 0 R 0 R 0 R 0 R 0 2010 R 0 R 0 R 0 R 0 R 0 Leeuwspruit 2008 R 140,000 2011 R 0 R 0 R 0 R 0 R 0 SP 2009 R 0 2012 R 481,500 R 0 R 0 R 700,000 R 0 2010 R 0 2013 R 0 R 0 R 0 R 1,560,000 R 0 2011 R 0 Carletonville 2008 R 0 R 0 R 0 R 660,000 R 0 2012 R 0 Ext 3 2009 R 0 R 0 R 0 R 522,000 R 0 2013 R 0 2010 R 400,000 R 0 R 0 R 0 R 0 Merafong City 2008 R 0 R 0 R 0 2011 R 0 R 499,000 R 0 R 636,000 R 0 NU 2009 R 0 R 0 R 0 2012 R 0 R 0 R 495,000 R 0 R 0 2010 R 0 R 0 R 0 2013 R 531,000 R 0 R 0 R 1,045,000 R 0 2011 R 0 R 0 R 0 Carletonville 2008 R 555,000 R 0 R 2,144,052 R 1,136,000 R 200,000 2012 R 0 R 0 R 0 Ext 4 2009 R 200,000 R 0 R 0 R 300,000 R 0 2013 R 0 R 0 R 0 2010 R 1,190,000 R 0 R 0 R 991,500 R 0 Oberholzer Ext 2008 R 3,014,660 R 4,912,400 R 3,941,179 R 3,359,500 R 300,000 2011 R 0 R 237,500 R 850,000 R 911,000 R 660,000 1 2009 R 1,564,200 R 501,500 R 2,713,133 R 356,580 R 1,640,000 2012 R 1,647,000 R 0 R 454,218 R 480,000 R 600,000 2010 R 1,111,000 R 1,033,000 R 0 R 2,195,000 R 400,000 2013 R 0 R 1,000,000 R 0 R 1,278,000 R 470,000 2011 R 867,750 R 1,040,000 R 3,021,879 R 4,017,000 R 1,520,000 Carletonville 2008 R 0 R 0 R 0 R 0 R 0 2012 R 3,464,389 R 429,250 R 1,019,077 R 3,886,000 R 180,000 Ext 5 2009 R 630,000 R 0 R 0 R 0 R 0 2013 R 2,049,800 R 1,195,000 R 1,430,000 R 2,497,000 R 60,000 2010 R 0 R 0 R 617,326 R 0 R 800,000 Oberholzer SP 2008 R 540,000 R 3,205,400 R 2,806,886 R 3,746,500 R 350,000 2011 R 0 R 467,500 R 0 R 531,000 R 790,000 2009 R 360,000 R 2,250,000 R 743,347 R 0 R 1,084,749 2012 R 1,344,000 R 0 R 0 R 320,000 R 0 2010 R 260,000 R 245,000 R 2,094,739 R 2,498,500 R 3,800,000 2013 R 700,000 R 0 R 0 R 0 R 0 2011 R 1,033,800 R 1,350,000 R 0 R 3,530,000 R 1,505,000 Carletonville 2008 R 0 R 0 R 0 R 0 R 0 2012 R 3,349,500 R 932,000 R 1,433,700 R 7,300,000 R 1,100,000 Ext 6 2009 R 0 R 0 R 0 R 0 R 0 2013 R 1,890,000 R 0 R 0 R 2,942,000 R 1,480,000 2010 R 0 R 0 R 0 R 0 R 0 Pretoriusrus 2008 R 893,000 R 1,560,000 R 298,471 R 1,325,000 R 1,100,000 2011 R 0 R 0 R 0 R 0 R 0 2009 R 1,788,000 R 0 R 821,400 R 0 R 970,000 2012 R 0 R 0 R 0 R 0 R 0 2010 R 2,237,000 R 0 R 0 R 563,000 R 1,820,000 2013 R 0 R 0 R 0 R 0 R 0 2011 R 1,705,000 R 260,000 R 0 R 2,651,000 R 1,110,000 Carletonville 2008 R 3,652,000 R 1,582,390 R 1,643,751 R 650,000 R 150,000 2012 R 0 R 0 R 227,935 R 1,832,800 R 340,000 Ext 8 2009 R 909,000 R 612,000 R 2,548,968 R 1,327,500 R 2,150,000 2013 R 400,000 R 0 R 600,000 R 0 R 0 2010 R 1,420,000 R 139,600 R 353,534 R 2,734,000 R 4,170,000 Waters Edge 2008 R 70,000 R 0 R 1,317,600 R 0 R 0 2011 R 1,218,000 R 1,645,000 R 504,560 R 2,756,000 R 1,450,000 AH 2009 R 0 R 0 R 0 R 0 R 0 2012 R 2,455,000 R 0 R 318,295 R 900,000 R 0 2010 R 0 R 0 R 0 R 765,000 R 0 2013 R 981,000 R 1,055,250 R 419,700 R 1,612,800 R 1,691,000 2011 R 0 R 0 R 0 R 0 R 0 Carletonville 2008 R 2,198,000 R 1,229,500 R 2,137,102 R 2,383,000 R 530,000 2012 R 1,900,000 R 0 R 0 R 1,080,000 R 0 Ext 9 2009 R 1,911,000 R 0 R 626,451 R 819,000 R 0 2013 R 1,701,250 R 0 R 0 R 0 R 0 2010 R 1,437,000 R 300,000 R 0 R 0 R 1,550,000 Wedela SP 2008 R 194,800 R 1,026,836 R 2,196,385 R 509,000 R 116,000 2011 R 970,000 R 414,000 R 0 R 864,000 R 460,000 2009 R 0 R 0 R 282,258 R 421,000 R 846,000 2012 R 2,350,000 R 0 R 896,700 R 2,557,000 R 760,000 2010 R 64,600 R 225,000 R 0 R 673,000 R 0 2013 R 4,146,000 R 900,000 R 1,200,000 R 495,000 R 1,910,000 2011 R 0 R 390,000 R 0 R 148,500 R 945,000 Carletonville 2008 R 0 R 0 R 0 R 580,000 R 0 2012 R 450,000 R 265,000 R 0 R 370,000 R 0 Ext 10 2009 R 0 R 0 R 0 R 513,000 R 0 2013 R 160,000 R 225,000 R 140,000 R 0 R 0 2010 R 0 R 0 R 0 R 420,000 R 0 Welverdiend 2008 R 0 R 0 R 0 2011 R 300,000 R 0 R 0 R 675,000 R 0 AH 2009 R 0 R 0 R 0 2012 R 150,000 R 0 R 0 R 650,000 R 0 2010 R 0 R 0 R 0 2013 R 0 R 1,100,000 R 0 R 0 R 0 2011 R 0 R 0 R 0 Fochville SP 2008 R 29,791,538 R 11,827,760 R 21,290,923 R 11,175,500 R 3,130,000 2012 R 0 R 0 R 0 2009 R 17,281,000 R 6,252,500 R 5,468,419 R 5,367,500 R 4,230,000 2013 R 0 R 0 R 0 2010 R 19,902,000 R 7,328,350 R 8,988,765 R 13,337,000 R 12,284,640 Welverdiend 2008 R 3,036,600 R 22,218,439 R 3,034,442 R 4,097,800 R 375,000 2011 R 13,479,960 R 4,189,000 R 3,850,859 R 33,050,200 R 12,730,000 SP 2009 R 300,000 R 239,700 R 0 R 988,000 R 0 2012 R 25,139,150 R 10,210,750 R 3,115,000 R 17,679,000 R 6,250,000 2010 R 2,020,000 R 0 R 695,000 R 2,088,000 R 500,000 2013 R 24,409,140 R 12,362,000 R 5,612,700 R 21,245,400 R 11,560,000 2011 R 1,400,000 R 1,809,000 R 0 R 1,981,500 R 1,730,000 Green Park SP 2008 R 0 R 0 R 0 R 0 2012 R 380,000 R 758,000 R 356,700 R 4,023,300 R 0 2009 R 0 R 290,000 R 0 R 0 2013 R 2,210,000 R 915,000 R 995,700 R 1,487,000 R 250,000 2010 R 0 R 0 R 0 R 0 2011 R 0 R 0 R 0 R 0 Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on 2012 R 0 R 0 R 0 R 0 the deeds registry. 2013 R 0 R 0 R 0 R 0 Banks R 0 R 0 Khutsong 2008 ABSA South R 0 R 0 2009 FNB R 0 R 0 2010 Nedbank R 0 R 70,000 2011 Standard Bank R 0 R 0 2012 Other Lenders 2013 R 0 R 0 33

The Housing Development Agency | Merafong Mining Town Housing Market 11.6 Market Share Market Share by Lender: All Residential Bonds Merafong City, all loans, by suburb by lender, through 2013 Understanding market share at the Waters Edge AH Oberholzer SP local level is key to understanding the Carletonville Ext 10 Oberholzer Ext 1 potential for end-user finance, where Khutsong South Carletonville Ext 5 Carletonville Ext 9 gaps might exist, and how to make the Carletonville Central case for more lending. Most suburbs Carletonville Ext 8 Carletonville Ext 4 Welverdiend AH in Merafong City experienced some lending over the past six years, except three suburbs that had no lending activity at all.

Comparing lending over time Merafong City NU and by suburb also shows which lenders perceive value or risk, and pinpoints investment by other lenders (brown bars).

Wedela SP

Fochville SP

Kokosi SP Kokosi Ext 3 Green Park SP

Kokosi Ext 1

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 1000 FNB 2000 Nedbank 3000 Standard Bank 4000 Other Lenders 5000

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

Waters Edge AH Oberholzer SP Carletonville Ext 10 Oberholzer Ext 1 Carletonville Ext 5 Carletonville Central Carletonville Ext 3

Welverdiend AH Carletonville Ext 8 Carletonville Ext 4

Merafong City NU

Wedela SP

Fochville SP

Kokosi SP Green Park SP

Kokosi Ext 3 Leeuwspruit 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 50 FNB 100 Nedbank 150 Standard Bank Other Lenders

The Housing Development Agency | Merafong 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 35% of all registered properties in Merafong City 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 low cost 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.

To encourage an increase in the supply of gap housing, Government can unlock sites, supply infrastructure or grants, or hook-up fee discounts. Government 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 Merafong City, this might be areas between Fochville SP and Carletonville Ext 8, higher priced more active markets, and Green Park SP.

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 down payment for the owner’s next house purchased up the housing ladder.

The Housing Development Agency | Merafong Mining Town Housing Market Average Equity to Average Sales Price 12.4 Equity Fills the Gap Merafong City, 2013 The value of average home equity related to the average sales price Equity is the value of one’s home less R 510K Carletonville Central R 526K the amount owed to the lender. The Carletonville Ext 1 R 449K R 580K chart shows the average equity per R 1 488K Carletonville Ext 2 R 2 638K suburb (the green bar) compared to Carletonville Ext 3 R 556K R 580K the average sales price per suburb. Carletonville Ext 4 R 531K R 661K This helps to show what portion of the Carletonville Ext 5 R 583K R 700K sales price might be paid for by the Carletonville Ext 6 R 754K homeowners’ equity. If a homeowner Carletonville Ext 8 R 479K R 670K in Khutsong SP wished to purchase Carletonville Ext 9 R 581K R 839K a home in Fochville, they could sell Carletonville Ext 10 R 656K R 1 100K their home and apply it towards the

Fochville SP R 531K R 594K cost of the new home, reducing the R 30K Green Park SP R 126K amount they would have to borrow. R 35K Khutsong South R 90K Instead of borrowing over R590 000 R 111K (the average sales price), they would Khutsong SP R 214K Kokosi Ext 1 R 159K potentially only need about R380 000

Kokosi Ext 3 R 148K (the orange bar in Fochville minus the green bar in Khutsong SP). Thus, Kokosi SP R 233K R 40K equity makes homeownership in higher Leeuwspruit SP R 147K R 55K priced neighbourhoods affordable, Merafong City NU R 208K R 411K expanding housing options. Equity Oberholzer Ext 1 R 539K closes the housing gap for less affluent R 579K Oberholzer SP R 549K homeowners because their properties R 476K Pretoriusrus R 495K are less likely to have a bond, and Waters Edge AH R 954K R 1 138K those markets have experienced more R 71K Wedela SP R 189K appreciation of value. It is important Welverdiend AH R 385K to consider this value in addition to a R 314K Welverdiend SP R 457K homeowner’s income. R 0K R 400K R 800K R 1 200K R 1 600K Avg Sales Price Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds reg- Equity invested by homeowners also istry. reduces risk by increasing their Measure Names Avg Sales Price financial stake in their home. This Avg Value of Residential Equity 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 | Merafong Mining Town Housing Market Report 12.5 Accessing equity closes the 5 Year Equity Growth Merafong City, 2013 Housing Gap and can drive demand Rates of equity growth, since 2007 to 2013

Sonderwater Understanding the difference in equity growth Khutsong SP Waters Edge AH rates on a map allows a better understanding Khutsong Ext 3 Oberholzer SP Blybank West Wits of which property markets can be leveraged to Khutsong Ext 2 Carletonville Ext 6 support more new development. Many higher Oberholzer Ext 1 Khutsong South Carletonville Central Welverdiend SP priced areas have experienced modest equity Carletonville Ext 8 Carletonville Ext 4 Welverdiend AH Carletonville SP2 West-Driefontein Mine growth (grey areas) or loss (red areas) over the past five years. This may be due to increasing sales prices (rather than amortization as new buyers tend to have less equity, and this market

Merafong City NU 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 Elandsrand Mine Wedela SP homeowners. Homes worth less than R500 000 Wedela Ext 3 typically have fewer loans, a faster-growing value, Kokosi SP Fochville SP and an initial housing cost that was low or free Green Park SP (thanks to Government investment in housing). Kokosi Ext 1 Kokosi Ext 5 Leeuwspruit SP Homebuyers can reduce the amount they have

Source: Stats SA Census, 2011, South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators re- to borrow through savings or the equity in their flect formal market data as reflected on the deeds registry. home, if they have an existing house which they Total Residential properties Avg value of Equity 0 can sell. This lowers their monthly payment or 1 000 20,00% 50,00% 2 000 increases the price they can afford. Leverage 3 000 ≥ 4 000 is the practice of using this equity to increase their housing affordability. This indicator thus becomes very useful for meeting, and closing, the housing gap. Growth in Equity Merafong City, 2008- 2013 Merafong’s properties under R500 000 show consistently higher growth in equity The change in the value of average home equity from 2008 than the market overall, suggesting a good source of funding to move houses up the 49% 50% housing continuum.

Constraints to using leverage in affordable quity 40% 36% housing markets include: the availability of credit

tial E tial 38% for potential buyers to pay the full value of the house; maximising the equity available to the

iden 30% homeowner; the availability of homes up the 26% housing ladder to buy; and in the case of RDP

f Res f 27% owners, the ability to sell Government subsidised 20% stock (which comes with an eight-year resale lue o lue 18% restriction). Other constraints include household 18% indebtedness; and the willingness of existing in Va in homeowners to sell their most important asset. 10% 13% 7% ange However, policies which address these constraints Ch 0% 4% can expand the housing ladder in remarkably 0% 0% quick and cost-effective ways. Closing cost 2008 2009 2010 2011 2012 2013 assistance, interest rate write downs, and loan loss funds all cost a fraction of new construction, Source: SA Deeds Registry via Lightstone (Pty) Ltd., 2015. All indicators reflect formal market data as reflected on the deeds registry. and put the opportunity, and choice, in the hands of the homeowner, rather than the Government. Change in Equity Affordable properties (under R500 000) All residential properties

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

13.1 Key Findings

With a ratio of 2.3, Merafong City’s affordability ratio is below the mining town average of 2.8, meaning it takes more than two times the average municipality income to afford the average house. Despite an average monthly income (R8 900), there remain large disparities among incomes and affordable housing access in certain areas within the municipality.

In some areas, sales prices used to determine affordability 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.

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 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 | Merafong Mining Town Housing Market Report Mind the Gap Table 13.4 Affordability Merafong City, 2013 Affordability indicators per suburb Actual affordability relies on Avg Monthly Target house Average Affordable Affordability understanding local household Subplace Name Income price Sales Price Price Gap Ratio income to determine what is

Blybank R 6K R 162K reasonably afforded by existing residents, how much of a gap exists Carletonville Central R 14K R 373K R 510K R -137K 1.4 and what is required to ensure more Carletonville Ext 1 R 10K R 277K R 580K R -303K 2.1 realistic affordability. The Affordability Carletonville Ext 2 R 11K R 277K R 1,488K R -1,210K 5.4 Ratio is determined by dividing the Carletonville Ext 3 R 14K R 357K R 580K R -223K 1.6 purchase price affordable to the

Carletonville Ext 4 R 19K R 501K R 661K R -160K 1.3 average household income by the average sales price. Nationally, it Carletonville Ext 5 R 16K R 427K R 700K R -273K 1.6 takes three times the average Carletonville Ext 6 R 5K R 133K income to afford the average Carletonville Ext 8 R 19K R 502K R 670K R -168K 1.3 sales price, which is just above the

Carletonville Ext 9 R 16K R 416K R 839K R -423K 2.0 mining town average of 2.8. This doesn’t mean that families are paying Carletonville Ext 10 R 13K R 353K R 1,100K R -747K 3.1 that, it means that most homes on Carletonville SP2 R 1K R 33K the deeds registry are not affordable Elandsrand Mine R 2K R 55K to the majority of South Africans. But Fochville SP R 22K R 572K R 594K R -22K 1.0 this indicator provides an important

Green Park SP R 4K R 105K R 30K R 75K 0.3 benchmark, by providing a sense of affordability levels, and how well local Khutsong Ext 2 R 3K R 82K markets might be meeting the needs Khutsong Ext 3 R 3K R 77K of local residents. Khutsong South R 3K R 89K R 35K R 54K 0.4

Khutsong SP R 4K R 109K R 111K R -2K 1.0 In Merafong City, there appears to be gaps in affordability in Kokosi Ext 1 R 10K R 254K many suburbs, as shown by the Kokosi Ext 3 R 4K R 101K negative price gap; the amount Kokosi Ext 5 R 3K R 68K by which local sales prices are

Kokosi SP R 8K R 217K higher than what’s affordable to local residents. Price gaps in Leeuwspruit SP R 3K R 91K R 40K R 51K 0.4 Fochville and Carletonville Ext 8 Merafong City NU R 6K R 161K R 55K R 106K 0.3 are negative, perhaps the result of Oberholzer Ext 1 R 27K R 715K R 411K R 304K 0.6 more recent housing development, Oberholzer SP R 15K R 389K R 579K R -191K 1.5 which drove up recent sales prices

Pretoriusrus R 22K R 577K R 476K R 101K 0.8 past income levels.

Sonderwater R 2K R 41K Introducing new products or strategies Waters Edge AH R 5K R 122K R 1,138K R -1,016K 9.4 are more likely to be sustainable if they Wedela Ext 3 R 4K R 100K are responsive to current residents.

Wedela SP R 6K R 157K R 71K R 86K 0.5 The target home price in column 2 can also be compared to estimated Welverdiend AH R 15K R 404K potential per-unit construction costs Welverdiend SP R 13K R 333K R 314K R 19K 0.9 to determine the amount of subsidy West Wits R 0K R 0K that may be required to build and sell West-Driefontein Mine R 6K R 158K the units to local residents.

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.

The Housing Development Agency | Merafong Mining Town Housing Market Mind the Gap Chart 13.5 Mind the Gap Merafong City, 2013 Affordability indicators per suburb

Blybank R 6K R 162K This chart is identical to the previous

Carletonville Central R 14K R 373K R 510K R -137K 1,4 chart but shows bar lines to better

Carletonville Ext 1 R 10K R 277K R 580K R -303K 2,1 visualise differences across the Carletonville Ext 2 R 11K R 277K R 1 488K R -1 210K 5,4 area. These tables measure relative Carletonville Ext 3 R 14K R 357K R 580K R -223K 1,6 affordability for each suburb in the Carletonville Ext 4 R 19K R 501K R 661K R -160K 1,3 target area in three ways: starting Carletonville Ext 5 R 16K R 427K R 700K R -273K 1,6 with the average income (column 1), Carletonville Ext 6 R 5K R 133K it calculates the average sales price Carletonville Ext 8 R 19K R 502K R 670K R -168K 1,3 affordable to the average family using Carletonville Ext 9 R 16K R 416K R 839K R -423K 2,0 standard underwriting terms (5% Carletonville Ext 10 R 13K R 353K R 1 100K R -747K 3,1 down, 11% for 20 years, up to 25% Carletonville SP2 R 1K R 33K of household income, column 2). It Elandsrand Mine R 2K R 55K compares that to the area’s average Fochville SP R 22K R 572K R 594K R -22K 1,0 sales price (column 3). Column 4 Green Park SP R 4K R 105K R 30K R 75K 0,3 (“Affordable Price Gap”) shows the Khutsong Ext 2 R 3K R 82K difference between the average sales Khutsong Ext 3 R 3K R 77K price and the local target (affordable) Khutsong South R 3K R 89K R 35K R 54K 0,4 house price. Column 5 divides the two Khutsong SP R 4K R 109K R 111K R -2K 1,0 values to show the affordability ratio, Kokosi Ext 1 R 10K R 254K the number of times it might take the Kokosi Ext 3 R 4K R 101K local income to afford the local sales Kokosi Ext 5 R 3K R 68K

Kokosi SP R 8K R 217K price. For example, in Carletonville Ext

Leeuwspruit SP R 3K R 91K R 40K R 51K 0,4 4, it takes 5.4 times the average income

Merafong City NU R 6K R 161K R 55K R 106K 0,3 to afford the average sales price.

Oberholzer Ext 1 R 27K R 715K R 411K R 304K 0,6

Oberholzer SP R 15K R 389K R 579K R -191K 1,5 In Merafong City, the average income

Pretoriusrus R 22K R 577K R 476K R 101K 0,8 is about R8 900, the average target

Sonderwater R 2K R 41K house price is R234 000 (how much

Waters Edge AH R 5K R 122K R 1 138K R -1 016K 9,4 house that income can afford), and the

Wedela Ext 3 R 4K R 100K average sales price is R530 000. Thus, Wedela SP R 6K R 157K R 71K R 86K 0,5 in 2013, it took more than double Welverdiend AH R 15K R 404K the average income to afford the Welverdiend SP R 13K R 333K R 314K R 19K 0,9 average house. These very high level West Wits R 0K R 0K indicators are useful when comparing West-Driefontein Mine R 6K R 158K affordability, to see which areas are R 20,0K R 40,0K R 0K R 500K R 1 000K R 1 000K R 2 000K R -2 000K R 1 000K 0,0 5,0 10,0 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 | Merafong Mining Town Housing Market Report Affordable Suburbs by Average Sales Price 13.6 Mapping Affordability Merafong City, Suburbs by average sales price and household size, 2013 These maps show the importance of taking local Sonderwater household income, or purchasing power, into Oberholzer SP Khutsong SP BlybankWest Wits the understanding of affordability. The first map Khutsong Ext 3 Khutsong Ext 2 shows average sales prices by suburb, with the Khutsong South darker areas having higher prices. The second Carletonville Ext 4 Welverdiend AH West-Driefontein Mine map shows the same area by affordability ratio, Welverdiend SP the darker areas (those with higher affordability ratios) showing a greater difference between suburb incomes and suburb sales prices. Merafong City NU While some areas appear affordable by sales price (such as Sonderwater, which

Elandsrand Mine is light grey on the top map, meaning a Wedela SP lower average sales price), they are not Wedela Ext 3 as affordable when considering local Fochville SP incomes (it appears darker green on the Kokosi SP Green Park SP KokosiKokosi Ext Ext 3 5 second map). These analyses do not take into Kokosi Ext 1 Leeuwspruit SP account the indebtedness of potential buyers, an important factor in determining bond eligibility. Rental housing, therefore, might be 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. an important option towards providing well-

Total Residential properties Sales Price located and professionally managed affordable 0 200 100 000 500 000 housing in those areas. 400 600 800 The areas with no dots have no residential ≥ 1 000 properties on the deeds registry – they are farms or open space, mines or informal settlements. Affordable Suburbs by Affordability Ratio Merafong City, by suburb, 2013 Relationship between average income and sales price (higher is less affordable)

Waters Edge AH West Wits Khutsong SP Carletonville Ext 6

Khutsong South Welverdiend AH Carletonville Ext 4

Merafong City NU

Wedela Ext 3

Green Park SP

Leeuwspruit SP

Source: Centre for Affordable Housing Finance in Africa, with 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.

Total Residential properties Affordability Ratio 0 0.3 3.0 1000 2000 3000 4330

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

14.1 Key Findings

According to the 2011 StatsSA census, 48% of households rent in Merafong City, which is well above the average range of 30% amongst the mining towns in the study.

The opportunity for rental housing development within Merafong City is strong within 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.

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

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 but inefficient way of meeting West Wits overwhelming housing needs. While a social Khutsong Ext 2 housing sector exists, targeting lower income Khutsong South families in multi-unit buildings, these are Carletonville Ext 4 Merafong City NU Carletonville SP2 Many Welverdiend SP West-Driefontein Mine primarily in large metropolitan areas. private developers and investors are considering expanding significantly into the rental segment. If the demand is better understood, Government can meet housing backlogs quickly and affordably by promoting policies which target affordable rental housing. Wedela Ext 3 Several conditions are crucial for the creation Green Park SP of successful and sustainable rental markets: density, high demand, and affordability. In order to sustain rental housing at scale, projects must be able to achieve density to keep costs down, and access ready markets, with good proximity to jobs, transport and educational opportunities to keep projects Source: South African Deeds Registry via Lightstone (Pty) Ltd, 2015. All indicators reflect formal market data as reflected on the deeds registry.

Number of Residential properties Type Rental Profile running smoothly. It is possible to bundle 0 Mines High 1 000 Low those indicators and find those areas primed 2 000 3 000 for rental housing. 4 330 14.5 Locating Rental Housing Markets Rental Index Method Implies Weight Indicator The map shows those areas more dense than 80 -120% area median Median Income Affordability 35% others, with moderate incomes and housing income market growth, all important factors when Population Density Exceeds metro average Density 35% considering the placement and promotion of Housing Growing Demand 15% rental housing. Performance Index Ratio exceeds metro Affordability Ratio Affordability 15% With security of tenure through a lease average 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 | Merafong Mining Town Housing Market 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, 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. For 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 a key component 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 | Merafong 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

This refers to 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 either 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 | Merafong Mining Town Housing Market 15.12 Leverage

Leverage is the practice of purchasing something by borrowing part of the total cost and 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 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 is inconsistent. This study uses Lightstone’s (www.lightstone.co.za) proprietary valuation methodology to determine value. 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 • Merafong City Local Municipality. Merafong City Local Municipality 2014/2015 Draft IDP. Merafong City.

The Housing Development Agency | Merafong Mining Town Housing Market 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