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Keith Lockwood

28 March 2019

English

Alison Tshangana

Report

Centre for Affordable Housing Finance in Africa

South Africa

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Construction

Economics

Human settlements

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South Africa

Estimated Contribution of Housing Construction and Residential Rental Activities to the South African Economy in 2017

This report forms part of a series of reports on Housing and the Economy which utilise a pioneering methodology developed by CAHF to describe, quantify and compare the impact of housing on the economies of various African countries. This report analyses the impact that housing construction and housing rental have on the South African economy in 2017. An economic value chain framework is used to quantify the direct impact of the construction and rental of housing on the gross domestic product as well as the intermediate inputs into housing construction and rental from ‘upstream’ primary, secondary and tertiary economic sectors.

The report finds that economic activity associated with housing directly contributed almost as much to the South African economy in 2017 as the entire agriculture sector, and the vast majority of other sub-sectors of the economy. The “housing sector” has a very high local content, and when its linkages with other sectors of the economy are clearly quantified and understood, its importance as a stimulator of both the industrial and service sectors becomes evident.

Housing’s impact arises mainly from two activities: the construction, maintenance and improvement of dwellings; and activities associated with the occupation of housing. This impact has traditionally not been very well understood, prompting the CAHF to commission earlier studies that sought to construct economic value chains for these activities and to estimate their individual and combined contributions to the economy. This study updates earlier estimates for 2014 and 2016 with 2017 figures.

The direct contribution of housing construction and housing rental to the South African economy declined from 3.9 percent of GDP in 2016 to 3.7 percent in 2017, due mainly to an increase in the import leakage linked to intermediate inputs in housing construction. This raises policy issues around the competitiveness of South African construction inputs – particularly manufactured inputs.

Creating a conducive “eco-system” for housing necessitates a focus on the development of sustainable, competitive up-stream supplier industries and financially-secure households. It also requires better quality information on the size and the nature of the housing economic value chain and its different elements, which – in turn – requires changes to the way in which data is collected by official sources such as Statistics South Africa. In particular, attention needs to be given to determining the contribution of informal housing construction and housing rental activities more accurately.

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