SA Affordable Housing May - June 2019 // Issue: 76 | Page 39

INDUSTRY MATTERS
"If government had continued
to follow its incremental
housing approach and had
adjusted its target market by
CPI annually, there would not
be a ‘missing middle’."
planning and is further fuelled by the failure of policy to
address the housing crisis in recent years. Developers are not
incentivised to build more affordable homes as they are less
profitable than higher end developments.
It is not only the supply of housing that impacts
affordability and limits access to housing, a large portion of
the population do not qualify for housing finance due to
indebtedness. A household may qualify for a FLISP subsidy
but it does not guarantee that they will receive a loan, as a
financial institution evaluates the creditworthiness and
affordability of a household to ensure that they are able to
repay the loan. Given high consumer debt levels (71.3% in
2018) coupled with high default levels (an average of 8.15%
in 2018), 44.8% (10.4 million) households with impaired
credit track records and with an average of 77% of
household salaries having to be paid to creditors, it is little
wonder that only about a third of home loan applicants can
obtain a home loan.
There is complex relationship between housing prices and
affordability. If we are to overcome the housing crisis it will
require dedication, compromise, innovation and partnerships.
Firstly, government must show strong commitment and
dedication to direct more resources towards human
settlements and to implement long-term policies that will
address not only the housing backlog but ensure the
sustainability of human settlements. All stakeholders and
beneficiaries also need to compromise on their expectations.
Over the past 25 years policy has shifted from an incremental
approach where the state strove to address the housing
backlog to the provision of a completed product, which
regrettably is not sustainable from both a fiscal or critical
mass delivery perspective.
Current practices are ineffective in addressing the housing
crisis and a holistic policy review, coupled with product and
delivery innovation, can play a crucial role in reducing the
housing backlog over time. This requires public and key
private sector players to collectively focus on addressing the
ever-increasing housing backlog, failing which we will
continue to see the growth of informal settlements and
backyard shacks.
In 1994 informal settlements totalled 300 and by 2018
this had grown to 2 700. Unless remedial action is taken
urgently, the formalised residential housing market can
expect to experience increasing levels of land invasion and
property hijackings as desperate indigent families seek to
fulfil their basic human rights for adequate shelter.
Pierre Venter is the general manager, Human Settlements
in Market Conduct Division at the Banking Association
South Africa.
www.saaffordablehousing.co.za
MAY - JUNE 2019
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