The impact of redistributive land reform on farmland prices in South Africa.
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Date
2024-10
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Publisher
University of Fort Hare
Abstract
Redistributive land reform remains a pressing focus of social and economic transformation in South Africa. A key point of contention regarding government’s approach to redistributive land reform is the fact that the vast majority of the land it acquires is purchased from private land owners. This is widely known as the ‘willing buyer / willing seller approach’, which is faulted by some critics as making land reform unnecessarily expensive and slow. This study seeks to examine one aspect of this debate, namely the implications of South Africa’s land reform programme for the farmland market, which in turn has implications for land reform.
The study is quantitative in nature, using data from 2002 through 2017 pertaining to land reform transactions and market transactions outside of land reform. In particular the data are aggregates at national, provincial and district level. Land transaction data were accessed from two sources, namely from Agri Development Solutions for farmland market statistics based on transactions data captured by the Registrar of Deeds, and from the then Department of Rural Development and Land Reform, which furnished data regarding land reform transactions. Other data sources included the South African Reserve Bank and Statistics South Africa. Descriptive statistics are presented showing trends in the variables under investigation, in particular average price per hectare and hectares transacted. The descriptive statistics and simple statistical tests tend to confirm that land acquired via the land restitution programme is expensive relative to prevailing market prices, while that acquired via redistribution is not. Graphical evidence is also presented to the effect that, at the level of districts, upsurges in the share of land transacted through land reform appear to exert a temporary upward pressure on farmland prices, whereas high prices paid for land reform land do not.
Inferential statistics were done using regressions. In this regard, the Fixed Effects and Random Effects model were used to analyse the findings. Results showed that the redistribution programme has a negative relationship with farmland prices. In other words, redistribution programme lead to a decline in land prices. Therefore, land reform programme is thus not a factor that has contributed to the land price increases in South Africa.
Description
MSc dissertation
Keywords
Land reform -- South Africa, Land tenure -- South Africa
Citation
Somkosi, P. (2024) The impact of redistributive land reform on farmland prices in South Africa. MSc dissertation. Alice: University of Fort Hare.