Land expropriation without compensation has decimated the demand for affordable housing, as low-income earners believe they’ll be given free homes by the government.

While the nature of the land expropriation bill is in question, and tangible outcomes of land reform are left uncertain, one sector which has been hit especially hard by the promise of ‘free land for all’ is the low-income affordable housing market.

The government’s promise of ‘free land’

Affordable housing is the term used to describe property that is generally subsidised by the government – think RDP homes and low-cost apartments often managed by the council.

While most South African’s aspire to own a piece of property they can call their own, government’s opaque public proposal of land expropriation without compensation has resulted in low-income earners holding onto their hard-earned cash instead of ploughing it into property.

This is according to Tom Gillham, the chief executive of E Home Loans, a specialist affordable housing mortgage originator that is part of the BetterBond, who spoke to Business Report on the slump in demand.

Affordable housing market in Gauteng the hardest hit

According to Gillham, the affordable housing market in Gauteng had dropped by about 40% in the past two months.

Gillham offered up his interpretation of the affordable housing market slump and its connection to land expropriation, saying:

“There is an ugly undercurrent where I would say it’s political and people have been told don’t buy now because you are going to get a house and land for nothing.”

Calgro M3 Holdings and the South African Affordable Residential Developers Association (Saarda) both echoed Gillham’s sentiments, noting that the severe drop in property sales is intrinsically related to the land expropriation debate.

Tenants have stopped paying rent

Derek Steyn, an executive director of Calgro M3 Holdings, confirmed that the affordable housing market had been hardest hit in Gauteng, following increased public debate surrounding the prospect of free land. Steyn said: