Thousands of Capetonians could soon afford housing in greater Cape Town, following a key announcement by President Jacob Zuma.
The affordable housing is aimed at people who earn too much to qualify for RDP housing but not enough to persuade banks to grant home loans.
In his 2010 State of the Nation Address, Zuma announced that the government was planning to set up a R1 billion fund to “incentivise the private banking and housing sector” to put roofs over more heads by promoting access to loans.
In his speech on Thursday, Zuma illustrated the plight of many by using the example of Mzukisi Mali, a public servant from the Fingo area in Grahamstown, who had written to Zuma, saying: “In 1994 my income was too high to get an RDP and too low to get a bond, this continued until to date. When I apply for an RDP I am told that I do not qualify and cannot get a bond because I am risky to the banks…”
Zuma announced: “Fortunately we have gone some way to address the problem facing Mr Mali and many others. We are pleased to report that this fund will start its operations in April, managed by the National Housing Finance Corporation.”
He said that from April, “people earning between R3 500 and R15 000 will be able to obtain a subsidy of up to R83 000 from provinces, to enable them to obtain housing finance from an accredited bank”.
Leading property company owner Bill Rawson said the subsidy was “great news”.
“There is a huge chunk of people who want ownership, who want to get into the housing market, and who are looking for ways to afford to do so.”
He said the R83 000 loans would essentially serve as deposits buyers could put down on properties, to help persuade banks to fund the balance through loans.
Rawson said the Parklands-Sunningdale suburb on the West Coast had shown just how big this market was in greater Cape Town. Houses there that were now selling for far more than R500 000 had been introduced as affordable housing in the 1990s and had met a huge gap in the property market at the time.
Speaking for the City of Cape Town, mayoral committee member for human settlements Ernest Sonnenberg welcomed the initiative.
“The city is a major supporter of the GAP housing initiative as part of our suite of housing delivery options.
“The city already has agreements in place with Standard Bank and Nedbank in particular, where the city has made well-located land available specifically for the GAP housing market.
“While it is difficult to quantify the number of Capetonians who will benefit from this fund, we know that it will help many of the city’s nurses, teachers and policemen, who are unable to access housing finance in the private bond market,” said Sonnenberg.
A report would be submitted to the council soon to extend the possible GAP market beneficiaries from those earning R10 000 a month to those earning R15 000 to align the GAP policy with the new fund, he said.
MSP Developments, part of the Mevelaphanda Holdings group and widely regarded as the largest developer of affordable housing in greater Cape Town, is working on on more than 9 000 houses in three large developments – in Blue Downs, between Kraaifontein and Durbanville, and between Somerset West and Firgrove.
Commercial director Philip van der Berg said: “We’re essentially building whole new towns, and this subsidy could offer great incentive for more such developments…
“The problem is that you will sometimes sell the same unit three times over because of the difficulty many people have with getting home loans. And of this, the biggest constraint has been in securing a deposit, with banks still being reluctant to grant 100 percent bonds in line with the National Credit Act.”
But Rawson warned that there were several potential obstacles to the roll-out of more suburbs like these.
First, buyers would still have to prove exemplary payment profiles – that they had managed their debt responsibly in the past – because this was the key factor banks used to decide whether to grant loans.
Second, even if there was a proven market for houses priced up to about R500 000, aided by the new subsidies, property developers would still battle to access finance to fund such new developments.
Third, banks still categorised many poorer Cape Town suburbs as “red line” areas, where they remained extremely reluctant to grant housing bonds.