Social housing is a relatively new concept in South Africa. The two primary objectives of the social housing program are to contribute to the restructuring of South African society in order to address structural, economic, social and spatial dysfunctionalities and to improve and contribute to the overall functioning of the housing sector in order to widen the range of housing options available to the poor.

The development of this form of housing has been plagued by local opposition, who argue that these structures may lead to reductions in the property values of nearby houses.

This is commonly referred to as the “Not in my backyard” syndrome. Negative preconceptions about social housing form the basis of this argument. However, the results of several international studies reveal that this is not always the case.

Some studies have shown that social housing projects may actually have a positive influence on surrounding residential property prices. More specifically, a review of available literature by Nguyen (2005) reveals the following results.

Social housing can be defined as a rental or cooperative housing option for low income persons at a level of scale and built form which requires institutionalized management and which is provided by accredited social housing institutions or in accredited social housing projects in designated restructuring zones.

There is a paucity of South African studies that examine the impact of social housing developments on nearby property prices. The aim of this paper is to fill this gap. More specifically, the paper seeks to determine the effect of an existing housing establishment, catering for low-income earners, in Nelson Mandela bay on property values in an adjacent residential area, by applying the hedonic pricing method.

The reason for selecting this particular area is that the proposed social housing developments in Nelson Mandela Bay have received a great deal of negative publicity and community opposition in the local media.

The paper describes the current social housing landscape in South Africa, highlighting the characteristics of existing social housing developments. It discusses the hedonic pricing methodology and presents the data including welfare estimates.

Results of the study show the following:

• Walmer Township has a statistically significant negative impact on Walmer property prices
• the average household, if located in the impact zone, is willing to pay between R10 092 and R48 459 to move 200m further away from the Walmer Township
• the number of stories, a swimming pool, an electric fence, the size of the erf and property values in the immediate surrounding area all have a significant effect on the value of a property in the Walmer neighborhood