THE IMPACT OF THE INTEGRATED RESIDENTIAL DEVELOPMENT PROGRAMME ON SURROUNDING PROPERTY VALUES; FLEURHOF, JOHANNESBURG

Nontokozo B. Mnisi and Prisca Simbanegavi

AfRES from African Real Estate Society (AfRES)

Abstract: South Africa is challenged with an increased backlog of adequate subsidised affordable housing in well-located areas that provide access to urban amenities and places of employment. On the other hand, such housing is frequently opposed to by homeowners in fear that their property values will decline and their neighbourhoods will lose their personality. As questions continually arise about whether the sales and prices of bonded properties are going to be affected by close proximity of subsidised affordable housing. Property value is considerably important as rising values within a neighbourhood suggests that the neighbourhood is moving in positive direction, which increases the attractiveness of that neighbourhood. Increased property value acts as a proxy of the quality of life, which are essentially difficult to assess numerically as they reflect the types of amenities neighbourhoods are able to provide as stated by the location theory (McArthur and McArthur, undated). The theory also states that the more accessible or attractive a location, the greater its profit potential. However, the relationship between subsidised affordable housing and property value is complex. As neighbourhoods are characterised by their complex interrelated attributes which together determine the neighbourhoods character (Nguyen, 2005).This study, will assess whether subsidised affordable housing provided through South Africa’s Integrated Residential Development Programme (IRDP) looking at Fleurhof, Johannesburg impacts the property value of neighbouring bonded properties. The study considers the study area of Fleurhof in Johannesburg, as it was developed using the IRDP and is located within close proximity to bonded properties. This study will use a quantitative methodology, using the hedonic price modelling. This model is used as it considers all the characteristics of a property from its physical appearance to the locational amenities that are located within proximity to the property and the characteristics found in the neighbourhood the property is located which in turn are reflected in the property’s price (Barton and Madsen, undated). This research reports clarifies bonded property homeowner concerns about their property values and the way in which subsidised affordable housing impacts it. Bonded properties located within close proximity to subsidised affordable housing has no negative impact on property values and bonded property homeowners need not be concerned about the proximity of subsidised affordable housing.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2017-09-01
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