With the demand for affordable housing in South Africa continuing to outstrip supply, there is an increased role for the private sector to play in the supply of well-located affordable housing for both rental and ownership.
According to Manie Annandale: Head of Affordable Housing development finance at Nedbank Corporate Property Finance, the growing low and middle class segment in South Africa is creating a robust demand for affordable houses for both ownership and rentals; yet there is simply not enough stock to meet this demand.
“There is a growing shortage of suitable housing stock, and it is therefore crucial that the private sector plays a role in identifying and supporting developments that deal with this issue to ensure that we are able to house all of our citizens in sustainable living environments”.
He says the Nedbank Affordable Housing development finance unit disbursed more than R1bn towards new affordable housing developments across South Africa in 2013, with more than 12 000 new home opportunities created.
“It is crucial that we have a well-developed and coordinated strategy between all stakeholders that presents viable solutions to the country’s lack of affordable housing, as well as the allocation of developments”.
Annandale explains that the strategic imperative for the Nedbank Affordable Housing development finance business remains to ensure that the bank can credibly demonstrate its participation to the Financial Sector Code in a sustainable way.
He says to build on this momentum, the unit is growing its resources in a measured way to take advantage of the increase in business, which also reflects the increasing demand in South Africa for housing to the lower income sector.
“Affordable housing is an absolute necessity in South Africa and Nedbank remains committed to identifying and financing developments that meet its strategic business goals whilst also helping to build a sustainable future for all citizens,” says Annandale.
South Africa’s current housing sector, with its stalling delivery and limited access to affordability, is trapped within a complex and nuanced interplay of demand and supply. The country has seen a particular increase in demand for rental stock, something which organisations such as International Housing Solutions (IHS) aim to address through its affordable housing developments.
Nedbank recently provided financing of R548 million to acquire 1423 affordable housing units in five separate developments in Gauteng. A social study by the IHS with the University of Cape Town and Professor Francois Viruly on residential units provided by the IHS reveals the direct and indirect benefits that tenants and owners derive from occupying these homes.
Rob Wesselo, Managing Partner at IHS says that the provision of housing goes well beyond the provision of shelter, with the study revealing that quality and well located housing can have a profound effect on the access that households have on social amenities and overall welfare.
He notes the positive impact that development of housing has on job creation. “The housing construction sector is an important employer with one of the highest employment multipliers in South Africa. It is estimated that IHS financing has created more than 50 000 direct and indirect employment opportunities, with 60% of these opportunities for unskilled workers. The management of the housing stock creates 5000 continuous skilled and unskilled employment opportunities on an annual basis,” he says.
“In addition to these benefits, and of value to the affordable housing market, the study showed the importance of providing diversity in the housing segment thus making filtering from one sector to next possible,” concludes Wesselo.