Wealth and suburban stratification in Cape Town: Investigating the persisting effect of housing segregation
Date
2022
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Abstract
This report aims to provide an estimate for the post-Apartheid distribution of growth in residential housing wealth, disaggregated according to historical race-based spatial classifications. Economic policies to address inequality in one of the world’s most unequal contexts have primarily centred on increasing income transfers and expanding the social wage. Despite the removal of legally codified race-based discrimination, inequality in South Africa is increasing both between and within racial groups. The objective of this report is to use the case study of Cape Town in South Africa to demonstrate whether housing wealth plays a role in consolidating, enhancing, or reducing divergence. The paper addresses a gap in the literature by accounting for the impact of race-based socio-spatial penalties on contemporary housing asset values, appreciation, and the accumulation of wealth in an urban and contemporary South African context. Data from the Cape Town General Valuations (GV) roll during 2012 and 2015 is used in combination with Census and historical Apartheid race-based spatial classifications to conduct descriptive and hedonic regression analyses. It is shown that houses in formerly White areas, on average, have a higher initial endowment and grow at 2 percentage points more per year compared to houses in previously Black and Coloured neighbourhoods. Although the difference in growth appears modest, it is shown that during the first 20 years of democracy in South Africa, there was an 8-fold difference, on average, in the additional gains from residential housing between previously White and Black areas.
Description
A dissertation submitted in fulfilment of the requirements for the degree of Master of Commerce to the Faculty of Commerce, Law and Management, School of Economics and Finance, University of the Witwatersrand, Johannesburg, 2022
Keywords
Wealth inequality, Housing inequality, Racial stratification, South Africa