http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 12.91Change: 0.12
R/$ = 11.98Change: 0.15
Au 1204.34 $/ozChange: 20.43
Pt 1161.50 $/ozChange: 21.00
 
 
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 Letters 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
© 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
Updated 2 hours 37 minutes ago The Century City conference centre, part of a new, green, R1-billion mixed-use development under construction in Cape Town, is on track to open in February 2016, with the first bookings already confirmed. Century City Conference Centre & Hotel joint CEOs Glyn Taylor...
Updated 2 hours 52 minutes ago JSE-listed Aveng independent nonexecutive director Mahomed Seedat has been named as successor to outgoing chairperson Angus William Band, who will retire at the end of June. In an announcement to shareholders on Wednesday, Aveng said Seedat would assume the role of...
Updated 6 hours ago A new tool that provides municipalities with a prewritten tender and contract, which can easily be adapted to suit the specific needs and circumstances of a particular region, is now available and is expected to help municipalities curb water losses. The Model...
Article contains comments
More
 
 
Latest News
Updated 1 hour 59 minutes ago State-owned power utility Eskom and Public Enterprises Minister Lynne Brown confirmed on Wednesday that contracts under the so-called short-term power purchase programme (STPPP) had been renewed ahead of the March 31, 2015, expiry date. Eskom told Engineering News...
Updated 2 hours 11 minutes ago The value of copper stolen in February decreased to R12.7-million, from R12.9-million in January, but was 18.1% higher than the value of copper stolen in February 2014, the South African Chamber of Commerce and Industry (Sacci) revealed on Wednesday. In its latest...
Updated 2 hours 40 minutes ago Paper and packaging group Mpact has concluded a broad-based black-economic empowerment (BBBEE) deal that will see a purpose-formed trust subscribing for 10% of the ordinary issued shares in group subsidiary Mpact Operations, which holds its South African businesses....
More
 
 
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
Projected capital expenditure (capex) in the South African automotive assembly industry should reach a record R7.48-billion this year, says the National Association of Automobile Manufacturers of South Africa (Naamsa) in its 2014 fourth quarter business review. Capex...
After several years of navigating project-threatening red tape and currency fluctuations, the 4.4 MW Bronkhorstspruit biogas power plant, which will supply clean energy to a leading automotive manufacturer in Gauteng, is expected to enter production before June....
RESOURCEFUL The raw material for the pilot plant would be supplied from the dissolving wood pulp plants at Sappi’s Saiccor and Ngodwana mills, in South Africa, and the Cloquet mill, in the US
South African paper and pulp producer Sappi reported earlier this month that it would build a pilot plant for the production of low-cost Cellulose NanoFibrils, or CNF (nanocellulose) at the Brightlands Chemelot Campus in Sittard-Geleen in the Netherlands.
The long-term outlook for Nigeria is a country that has the potential to be very strong. So affirmed International Monetary Fund (IMF) Nigeria Mission Chief and Senior Resident Representative Dr Gene Leon on recently. "But we are starting from a point of huge...
Poor infrastructure planning and inadequate maintenance are becoming increasingly problematic for new developments and the associated infrastructure required to support such developments. In many urban and rural municipalities, the state of infrastructure has been...
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96