The Growth of Formal Houses in Rural Areas

Stats SA's latest report shows that, in 2017, 53.5% of our population fully owned their own homes. If you're reading that and wondering how so many people have managed to pay off their bonds, you're thinking along the wrong lines.

Let's look at a few more statistics before getting into how and why more than half the country is free of home loans.

80.1% of our population live in formal homes. When you look at this per province, the percentages might surprise you:

• Eastern Cape: 70.4%
• Free State: 81.7%
• Gauteng: 78.5%
• KwaZulu-Natal: 78.6%
• Limpopo: 91.7%
• Mpumalanga: 86.9%
• Northern Cape: 86%
• North West: 79.9%
• Western Cape: 78.9%

In many provinces with predominantly rural areas, formal home living is high – much higher than those with urban hubs like Gauteng and Western Cape.

Many of the paid-off homes are in rural areas, not in cities. Even though 63% of the population live in an urban area (not surprising, because people come to major cities to find work), the number of homes being built in rural areas is growing steadily.

How is it happening?

There are three possible explanations for why formal housing in some rural areas is booming.

Housing subsidies

Since 2002, the number of households receiving housing subsidies from the government has greatly increased from 5.6% to 13.6% in 2017.

A return to rural areas

There is an exciting and growing phenomenon in South Africa of younger people going to metropolitan cities for jobs and, being extremely clever with their salaries, saving enough money to take back home in a few years, and used to invest in building homes and businesses.

Bulk buying

South Africans have long been wise to the benefits of bulk buying – stokvels (a savings or investment society to which members regularly contribute and from which they receive a lump sum payment or products) have been an extremely popular money-saving vehicle for years because of the benefits of bulk purchasing. Many communities will get together to buy building materials for their houses in bulk to lower costs.

Personal loans can also help

Homes are not always built in one go. A person may save a little money, add a double garage, save a little more, and add on a fourth bedroom. By doing it this way, many people own their homes outright because they never had a bond to begin with! The trade-off is between either having a home built quickly, or being bond-free. This is where a personal loan may come in handy. You get a cash injection to use immediately and you pay it off in small amounts over several months. Reputable companies offering personal loans have strict rules for lending, so they won't approve a loan to someone who can't afford the monthly repayments. Due to the interest charged over the loan term, you will end up paying more than the loan was worth, but the benefit is that you can possibly build your home in a shorter period of time.

If you've been dreaming of adding that outside extension to your home for years, a personal loan might just be the way to make it a reality. Using our comparison tool, you can get a personal loan quote from a number of financial service providers and be on your way to building your dream home in no time.

Sources: Worldometers; Biz News; Daily Maverick; Stats SA

Prices quoted are correct at the time of publishing this article. The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.