The state of municipal services can leave a big impression on potential homebuyers and renters. Overflowing rubbish bins lining the streets, unpredictable loadshedding, the frustration of empty taps, and broken street lamps all paint a picture that can significantly impact a property's desirability. This discomfort with service delivery isn't just a feeling — it's a driving factor in South Africa's housing market. According to the latest FNB Property Broker Survey for Q1 2024, the desire for improved utility and municipal services has, for the fifth consecutive quarter, remained the top reason why homeowners are choosing to relocate.
Underlining this sentiment, Prop Data's latest poll reveals a resounding call to action from the industry itself — a staggering 73% of real estate agents confirm that local service delivery is directly impacting their businesses. This clear message from both homeowners and industry professionals highlights the urgency for improvement in South Africa's municipal service landscape.
Unpacking the poll result
According to Michelle van Deventer, Director at Century 21 West Coast, the substantial percentage suggests that issues such as unreliable utility services, poor maintenance of municipal infrastructure, and inadequate public services are common across many areas.
“This trend is consistent with broader national reports from 2023, which showed an increasing number of property owners relocating in search of better-managed municipalities,” she says.
Van Deventer adds this is having an impact on property practitioners, as reflected in the poll results. “Poor service delivery can lead to lower client satisfaction, decreased property values, and increased difficulty in selling or renting properties. Real estate agents might face extended periods of time with properties on the market and potentially reduced commissions. This situation underscores the importance of good local governance and infrastructure investment in maintaining a healthy property market.”
Lee Scheepers, Marketing Manager at Seeff Umhlanga Rocks, also agreeing with the results, says the recent 2024 General Elections clearly demonstrate that service delivery is a key concern for everyone. “While a small percentage may experience fewer issues, it’s clear municipal service delivery is a widespread issue. Local factors have exacerbated the issues we all experience, from blackouts to rolling water problems and recent storm damage in Durban. These issues have significantly influenced consumer sentiment.”
Service delivery is a major factor in real estate
Location, location, location is the number one rule in the property industry. And while buyer and renter tastes change, an area’s safety, amenities, and appeal remain a strong decider when putting down roots.
Van Deventer says recent data and trends show service delivery is having a profound impact on the property market. “Lightstone’s 2024 Annual Estate Agent Survey indicated that regions with better service delivery saw an increase in property transactions and higher property values compared to those with poorer services. This reflects a growing awareness among property buyers and investors of the critical role that reliable local services play in property investment decisions,” she says.
Reliable services like electricity, water, and infrastructure make properties more desirable and ensure stable market conditions. And this investment potential cannot be understated. “Good service delivery also supports business operations and community development, enhancing the appeal of both residential and commercial properties,” says Scheepers. “Additionally, areas with strong service delivery often benefit from supportive government policies and incentives, making them more attractive for investment and contributing to long-term market stability.”
Estate agents feel the pain of poor service delivery
The latest 2024 Governance Performance Index (GPI) shows that 38% of municipalities in the country are either currently under administration or considered ‘dysfunctional’. This has created some difficulties for local real estate agents.
“We’re seeing decreased property values, reduced buyer and renter interest, and higher maintenance costs,” says Scheepers. “Frequent blackouts, water shortages, and inadequate infrastructure can lead to increased vacancies and negative perceptions, complicating marketing efforts and transactions. Additionally, navigating local regulations and dealing with community dissatisfaction creates an unstable environment that deters investment and interest, impacting the ability to market, sell, and manage properties effectively.”
Glenn Norton, Broker/Owner at RE/MAX Masters South Africa, says operating in Johannesburg has become more challenging because of the service received. “We see constant electricity and water outages. Robots never seem to get fixed and pavements aren’t maintained. The broken robots, in particular, cause major traffic jams and in some cases accidents. It is also a potential security risk in some areas,” he shares.
How local government can improve the situation
Despite above-inflation increases in municipal tariffs, service delivery still falls short of expectations. The GPI reports that citizen satisfaction levels with municipalities are notably low, with the countrywide average sitting at 30%. Property practitioners also believe that local governments can do more to enhance service delivery and create a better foundation for the property market to flourish.
“It will require a multi-faceted approach involving investment in infrastructure, enhancing public services, ensuring transparent governance, leveraging technology, forming public-private partnerships, and adopting sustainable development practices. By focusing on these areas, local governments can create a more attractive environment for property investment and improve the overall quality of life for residents,” emphasises Van Deventer.
Improving the quality of service should also be prioritised. “Local governments need to vet suppliers and check their credentials before awarding any contracts,” says Norton. “In many cases, shoddy work is being done or not completed and we are seeing the impact in our communities.”
Property professionals can spark change in their areas
With service delivery playing a vital role in the success of their business, real estate agents can take matters into their own hands. “Consider corporate social responsibility (CSR) initiatives like community engagement, partnerships with local authorities, supporting infrastructure projects, hosting educational programmes, implementing eco-friendly practices, and facilitating volunteerism,” says Scheepers. “These efforts not only improve service quality and residents' lives but also enhance practitioners' business success by creating a more attractive environment for buyers and renters.”
“By spearheading community-based clean-up projects, practitioners can enhance conditions and also build goodwill in the community,” says Norton. “It also helps to open lines of communication by nurturing relationships with local ward councillors.”
“Don’t underestimate the power of collaborating with other businesses in your area,” urges Van Deventer. “Together you can amplify your challenges and work on solutions together.”
Practitioners can also embrace online platforms in their pursuit of better service delivery. “This can take the form of using social media to facilitate communication between residents and municipalities, report challenges experienced, and hold municipalities accountable,” she says.
Communities are filling in the service gap
Over the years, businesses, non-profit organisations, community groups, and residents have taken matters into their own hands in search of better environments.
- Spekboom plant initiative: “This innovative solution in the West Coast saw hundreds of these small-leaved succulents donated by a resident, which were used by the local municipality to increase the town’s green footprint,” says Van Deventer.
- Green energy: “There has also been a notable surge in initiatives focusing on wind farms and solar power installations on the West Coast as a response to the persistent challenge of loadshedding,” highlights Van Deventer. “This trend reflects a growing acknowledgement of renewable energy's potential to mitigate electricity shortages, leveraging the abundant natural resources for sustainable power generation.”
- Ratepayer associations: “There’s been greater involvement in ratepayer associations in communities,” says Scheepers. “A notable example, the uMhlanga Ratepayers' and Residents' Association (URRA), supports community efforts to address service delivery challenges. It plays a crucial role in advocating for better services, engaging with local authorities, and mobilising resources to improve infrastructure and amenities.”
- Crisis relief efforts: “Communities are coming together to support each other, demonstrating the power of collective action,” shares Scheepers. “In the KwaZulu-Natal North Coast, we’ve seen the support pour in to assist victims of the recent flash flooding and tornados experienced in the area. By pooling resources, providing assistance, and coordinating relief efforts, communities can mitigate the impact of natural disasters and address immediate service needs more effectively.”