http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.05Change: -0.06
R/$ = 10.71Change: -0.05
Au 1280.65 $/ozChange: -6.53
Pt 1421.50 $/ozChange: -2.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 06, 2012

Raising affordable-housing lending constrained by supply deficit

Back
Engineering|Africa|First National Bank|Housing|National Housing Finance Corporation|Africa|South Africa|Bank Predicting|Entry-level Buyers|Finance|Marius Marais
Engineering|Africa|Housing||Africa|||
engineering|africa-company|first-national-bank|housing|national-housing-finance-corporation|africa|south-africa|bank-predicting|entry-level-buyers|finance|marius-marais
More Insight
© Reuse this



The extent to which prominent lenders can issue loans to individuals entering the affordable housing market is being constrained by the lack of affordable-housing developments in South Africa.

Homes within the R350 000 to R550 000 cost bracket are in undersupply, with only 15 000 to 20 000 new units entering the market on a yearly basis, despite a market demand of over 600 000.

First National Bank housing finance CEO Marius Marais tells Engineering News that the issue lies not with the banking sector’s aversion to the issuing of loans to first-time entry-level buyers, but rather the ability of these individuals to find a house in their price bracket.

“There is a perception that banks aren’t lending enough, but there are larger factors at play, most significantly the lack of supply. We don’t have a limit as to how many affordable-housing loans we can issue, but we are restrained by market forces,” he explains.

FNB recently reached its R10-billion loan target in the affordable-housing market, which provides houses to qualifying customers with a gross monthly income of up to R18 000, with the bank predicting significant growth in this segment.

To offset the supply deficit, FNB channels around 65% of loans into housing developments which are aimed at growing the number of new houses available, and bolstering the secondary affordable-housing market.

Meanwhile, Marais says that government has a fundamental role to play in creating appropriate market interventions and policies that will play a long-term role in assisting first-time buyers in accessing the market.

He adds that the engagement of the private sector with government has resulted in the devel- opment of a finance-linked subsidy programme (Flisp), driven by government agency the National Housing Finance Corporation, as well as a loan default initiative, the Mortgage Default Insurance (MDI) programme. Both initiatives should be implemented within the next year.

“Flisp will provide considerable assistance to those individuals who would otherwise never be able to afford their own home, while MDI will provide an essential form of government-backed risk cover that will enhance the appetite of banks and enable a greater degree of stable liquidity in the market, creating stable market cycles,” Marais notes.

This backing from the State is set to provide some degree of protection for banks, which face the threat of systemic risks such as the recent global economic downturn.

“The last thing you want as a bank is a property market that goes into heavy cycles during which the institution will make money and take severe losses. The fact that government is the guarantor is significant because it comes with a sovereign credit rating and a capital base,” he says.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
Neil Gopal
The South African Property Owners’ Association (Sapoa) has appealed to Rural Development and Land Affairs Minister Gugile Nkwinti to invoke the discretionary powers available to him under the Spatial Planning and Land Use Management Act of 2013 to prevent...
Wilson Bayly Holmes-Ovcon (WBHO) had delivered “a reasonable performance” for the financial year ended June 30, said CEO Louwtjie Nel on Monday. “We are getting through this tough period. It hasn’t really improved much over the past two, three years, even...
Several rural communities are facing severe water contamination, the DA said on Monday after it conducted a probe into water quality in four provinces. "The vast majority of South Africans are receiving clean and reliable water, but there are problems and they appear...
Article contains comments
More
 
 
Latest News
Government, in conjunction with industry clusters had to encourage preferential procurement in the mining industry, Department of Trade and Industry (DTI) capital equipment and allied services director Tapiwa Samanga has said. In a statement issued on Monday, he...
Neil Gopal
The South African Property Owners’ Association (Sapoa) has appealed to Rural Development and Land Affairs Minister Gugile Nkwinti to invoke the discretionary powers available to him under the Spatial Planning and Land Use Management Act of 2013 to prevent...
The Financial Services Board (FSB) has extended telecommunications group MTN’s broad-based black economic-empowerment trading platform MTN Zakhele’s exemption to the directive requiring over-the-counter (OTC) trading platforms to apply for a licence to operate,...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks