DOES AN INCLUSIVE HOUSING DEVELOPMENT DEPRESS NEIGHBOURHOOD HOUSE PRICES? A CASE STUDY OF COSMO CITY, JOHANNESBURG, SOUTH AFRICA.

Abstract

South Africa joined the global world in building inclusive housing, known as Mixed Income Housing (MIH) as a way to integrate and transform residential markets previously distorted by the discriminatory apartheid regime. However, despite the benefits of MIHs in deconcentrating poverty while boosting housing supply, these inclusive neighbourhoods often experience amplified cases of ‘Not in My Back Yard’ (NIMBY) for various reasons. Thus, approval processes of these inclusive housing developments get to be highly contested in courts, which causes huge delays in their completion. The paper aims to investigate the effect of NIMBY on the price of houses in a mixed-income neighbourhood. The paper used a cross sectional hedonic model on houses sold in the neighbourhood of Cosmo City MIH. The limitation is that a typical and purposely selected Cosmo city case study may not be generalizable to South Africa at large. Results show that Cosmo City had negligible effects on neighbourhood house prices. This is rather surprising given the unfavourable perception encountered during its development. The practical implication is that improving infrastructure such as roads to reduce traffic congestion, building new schools, new hospitals, security services, and new shopping centers reduce pressure on available services and amenities making inclusive housing acceptable in its neighbourhood. The social implication is that inclusive housing developments default into supplying the much-needed social housing in South Africa. Scientifically measuring perception on accepting MIH development projects in well-established neighbourhoods does contribute to understanding the plight of housing shortage by the public in ways that accepts inclusivity from an investment point of view.