SA Affordable Housing November / December 2016 // Issue: 61 | Page 10

NEWS

Need for affordable housing
defies economic slump
Despite South Africa's economic turbulence, opportunities continue
to exist. The affordable property industry is one of them, especially
when looking at The Vines in Eerste Rivier as an example.

Artist’s impression of what The Vines will look like once complete. Image: Power Group

I

n recent years, the housing demand among low and
mid-income earners has outstripped the supply. This
makes it one of the most interesting segments of the
South African property sector, local industry leaders say.
Recent figures by Statistics South Africa have shown that,
in the first three months of 2016, the country's Gross
Domestic Product (GDP) declined by an annualised 1.2%,
compared to a 0.4% growth over the last quarter of 2015.
Culprits include job losses and a shrinking farming and
mining output. There was some positive news too: the
building sector for instance, saw its GDP contributions
increase by 0.5%.
Gary Power, marketing director of Power Developments,
says, “The growth is no surprise. We have been developing
affordable housing projects as usual, despite some tough
macro-economic conditions with a spike from an
affordable or GAP housing point of view.” Referring to the
residential property sector that caters for individuals who
earn too much to qualify for a government-subsidised
home and too little to access the open bonded market.

8

NOVEMBER - DECEMBER 2016

AFFORDABLE
SA HOUSING

Government is trying to move away from the ‘hand out
mentality’ related to free government housing known as
BNG or Breaking New Grounds (previously RDP).
Government is trying to move towards Financially Linked
Individual Subsidy Programme (FLISP), and GAP housing
for people earning above the BNG threshold of R3 500 and
earning a maximum of R15 000 household income a
month. The reality however is that purchasers are able to
afford bonds if they earn R10 000 or more a month. This
leaves a gap in the market between the R3 500 and
R10 000 income earners.
“The demand for affordable homes has not declined - on
the contrary it is set to only increase over the next few
years. There aren’t many new homes available in the
R300 000 to R650 000 price range, while the demand is
certainly there,” he continues. “People who spend
R4 200+ per month on rent often want to own their own
house, but don't have much choice or struggle to access
bank finance. Prospecting home owners who can't apply
for government-subsidised housing because their income
is too high and those who don't earn enough to buy a
bonded home, are stuck between a rock and a hard place.”