A division of a leading South African bank says its funding of new affordable-housing projects acts as a catalyst to address the prevailing housing backlog, the clearing of which is also viewed as important to the growth and transformation of the economy.

“More than 600 000 families seek affordable housing in South Africa yearly, yet only 25 000 units become available. Therefore, providing funding for developers aims to fuel the availability of affordable houses to cater to people’s needs,” says Nedbank Corporate Property Finance affordable housing unit head Manie Annandale.

ccording to the financial sector code, affordable houses are units costing R620 000 and less. Millions of South Africans have struggled to obtain home loans from banks because they are either indebted or the banks are apprehensive about applicants being able to repay the loans.

Owing to this, statistics indicate that only two out of ten people who apply for home loans from banks get their home loans approved, leaving eight people without funding and, therefore, also without houses, notes Annandale.

He points out that the affordable-housing market is focused on developers providing people with affordable rental accommodation to cater for those who do not receive approval from the banks. Hence, developers are building three- or four-storey walk-up apartment blocks.

More people are also resorting to rentals, as renting the apartments entails fewer procedures that do not require loan approvals from banks.

This has worked for citizens and the developers in the low-income sector because, contrary to popular belief – that people in the low-income sector cannot afford housing – the bad-debt statistics indicate that fewer than 1% of people in this sector are bad debtors, Annandale highlights.

Against this background, he mentions that it remains important for Nedbank to have an ‘appetite’ to fund such developments and that the funding remains sustainable.

“The only way that our funding can remain sustainable is [to ensure] we fund developers who have a proven record of successful property development projects,” Annandale adds.

He states that, since the division was launched in 2008, its funding of projects has grown exponentially at about 30% year-on-year.

Government, however, could play a critical role in assisting developers in the affordable-housing sector by providing the land required for such projects, thereby helping to deal with the socioeconomic challenge.