Gentrification In Cape Town

The City of Cape Town cannot seem to provide affordable and accessible housing to those who need it. This is seen by the growth of informal settlements around townships, especially those close to industrial areas. One of the possible reasons for this is the rapid growth in property inflation rates of around twelve percent which is almost double the rate of inflation in Cape Town (Silber:2016). In an attempt to cater for the growing middle class of the country, gentrification takes place. Gentrifications is a process whereby previously derelict and damaged areas are refined and upscaled in order to match the tastes of a growing middle-class an example of an area in Cape Town undergoing gentrification in Cape Town would be Woodstock. Gentrification

The right to adequate housing is a basic constitutional right according to the South African constitution and is also seen by many as a basic need. Silber argues that in order for Cape Town to become a more inclusive city, in terms of urban development, it should disrupt market forces which the city and government officials have the power to do and proposes that Rent Control is one of the possible solutions to the problem. (2016)

In order to understand rent control and its effects basic supply and demand theory, as well as their graphs, must be understood. Figure 1, below aids this

The “Law of Demand” states that ceteris paribus the higher the price of the good, the lower the quantity demanded of the good and vice-versa. Demand can be shown on a demand curve (labelled “D” on the graph), each point on the demand curve represents the quantity demanded at a specific price. The demand curve also shows ‘Marginal Benefit’- the consumers’ willingness and ability to pay. Supply, on the other hand, refers to a firm which has the technology and ability to produce a good, can profit from its production and plans to sell the good. The “Law of Supply” states, ceteris parubis, the higher the price of the good, the greater the quantity of the good supplied. This is because Marginal Cost (the cost of producing an extra unit of the good) increases as the quantity produced increases. The supply curve (S), in figure 1, illustrates marginal cost, which is the lowest price the firm is willing to sell. Where supply curve meets the demand curve (Marginal Cost = Marginal Benefit) market equilibrium, point E, is reached. Both price and quantity at E, are at an equilibrium on the Supply and Demand curve. Any other combination of points on the Supply or Demand Curve throws the market into disequilibrium, market pressure will either be exerted downward or upward in order to push the market back to equilibrium depending on whether the disequilibrium point is above or below the