R/€ = 13.04
R/$ = 12.07
Au 1204.60 $/oz
Pt 1170.50 $/oz
Jul 25, 2003
Housing forum debates low-cost funding optionsBack
© Reuse this The first Housing Finance Forum was held yesterday, in Johannesburg, under the auspices of the National Housing Finance Corporation (NHFC), a development finance institution responsible for facilitating access to housing finance for low- and moderate-income communities.
CEO of the NHFC Samson Moraba said the establishment of the Housing Finance Forum stemmed from a need for vibrant debate among housing finance practitioners to realise models that are tailored to suit the South African low-income housing market.
“The challenge for those in the housing finance sector is to adopt global best practice in our country’s emerging market, while taking cognisance of our unique local features.
“Through open discussion and debate, we will be able to attain creative solutions for sustainable low-income housing finance models,” Moraba explained.
The forum deliberated whether the mortgage instrument was relevant to low-cost housing.
Simon Stockley, CEO of South African Home Loans, argued that the housing finance sector should not focus on the mortgage instrument in itself, but on the funding mechanisms underpinning it.
“The mortgage product has relevance only in relation to mature, as opposed to emerging, markets,” said Stockley.
He explained that a mortgage bond is essentially a highly-sophisticated product, which also comes at relatively high costs.
“I believe that the lower-income market requires a slightly more innovative mechanism, which is currently unavailable in the South African market, because there is lack of competition in the mortgage market,” he added.
He pointed out that, currently, competition between mortgage products is restricted, as four big banks are monopolising the market.
After researching alternative funding mechanisms, Stockley and an association of venture capitalists established South African Homeloans, the first discount home loan specialist in the country, which uses the securitisation model to raise capital.
“We assemble parts of mortgage loans and sell off income from mortgage loans directly into the capital market. The securitisation model has been highly successful for us, since we have managed to grow our market share from zero to 7% per month, within a space of four years,” he explained.
David Porteous, head of Finmark Trust, a nongovernmental organisation aimed at making financial markets work for the poor through the sustainable expansion of access to financial services, including housing finance, said there has been a swing from the mortgage to the nonmortgage model, and added that there should be a middle ground between the two models to serve the needs of the low-income market.
“There is always room for nonmortgage products, but mortgage has relevance because it is the only way to answer the affordability question in a sustainable fashion,” he said.
Edited by: Martin Czernowalow© Reuse this Comment Guidelines (150 word limit)
Other Municipal Services and Engineering News
Multi-disciplinary engineering consulting firm GIBB has compiled a business plan, aimed at identifying challenges that exist at the multi-purpose Thusong Centres, in the Eastern Cape, to support the effective functioning of the centres. GIBB has been tasked by the...
Municipal water and sanitation services eThekwini Water and Sanitation (EWS) says construction of the Northern Aqueduct Augmentation, which forms part of the eThekwini strategic master plan to deal with the increasing demand for water in the northern regions of...
To enhance and monitor the quality of municipal infrastructure and services, engineers should head the various departments of South Africa’s municipalities as they have the necessary skills and expertise to understand the engineering aspects of the services in...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...