What is gap housing?

“Gap housing” is a term that describes the shortfall, or ‘gap’ in the market between residential units supplied by the state (which cost R100 000 and less) and houses delivered by the private sector (which are not less than R250 000).

The gap housing market comprises people who typically earn between R3 500 and R15 000 per month, which is too little to enable them to participate in the private property market, yet too much to qualify for state assistance.

To deliver more housing opportunities to these people, the City of Cape Town has analysed this gap in housing supply and devised a strategy to start filling it. The strategy is two-fold: it induces the private sector to supply housing units at lower prices, whilst simultaneously encouraging low income, employed individuals to build their own houses.

How big is the gap market?

It is difficult to estimate precisely how large the demand for the gap housing product is, as it fluctuates with interest rate changes and employment levels. It also depends on the number of families who voluntarily choose to make longer term financial commitments. However, it is estimated that as many as 165 000 families in Cape Town would be interested in and qualify for gap housing support. There has been solid and sustained interest in pilot projects that have already been launched.

Cape Town’s gap housing strategy

The City of Cape Town’s gap housing strategy comprises two parts:

• the sale of discounted serviced plots to aspirant owner-builders
• The sale of discounted land to institutions (such as development companies, banks, etc.) wishing to deliver housing products at lower prices

The former tends to serve the lower-end of the gap housing segment and the latter the upper end. In both cases, more cost effective building technologies and materials contribute to delivering the gap housing product in greater numbers. To explore the possibilities thereof, in October 2008, the City of Cape Town hosted a “Show Village” in Scottsdene, Kraaifontein.