Housing in Southern Africa July 2015

NURCHA’s rapid growth

T he Affordable Housing pro- gramme has been a steady contributor to NURCHA’s finan- cial results and a significant player in the National Department of Human Settlements to achieving the Out- come 8 goals. NURCHA, government’s imple- mentation arm and development finance institution, has provided Af- fordable Housing developer funding of R1,74 billion to deliver 38 326 hous- es during its 12 years in existence. The Affordable Housing Pro- gramme provides finance to contrac- tors and developers specialising in housing under R650 000 and par- ticularly Gap housing. And NURCHA offers favourable and competitive short term loans in this niche mar- ket segment. The dynamic team of professionals at NURCHA recently held a number of roadshows across the country to attract new business, expand their presence in tough eco- nomic conditions, and showcase a variety of their product offerings. This included the Emerging Contractor De- veloper Programme for new entrants to the sector. With a loan book of R600 million, DeanGounden, ProgrammeManager: Affordable Housing, says: “We have made inroads in seeking new clients in other provinces as well as forging closer relations with provincial and national departments of Human Settlements.” He explains that the key to growth in the Affordable Hous- ing Programme is the provision of development finance for sectional title units up to R650 000. “We have seena steady growth in the afford- able sectional titlemarket and would like to significantly grow this market seg- ment.”

A string of well-priced housing opportunities easily accessible to work opportunities and quality housing has contributed to NURCHA’s well-deserved reputation. FundingAffordable Housing, Gap, Sectional Title and high-density forms part of NURCHA’s portfolio.

In the current financial year, NURCHA has increased its sectional title market share from 9% to an impressive 41%. The loan spread includes: full title affordable hous- ing at 50%, down from the previous year’s 63%, and Gap housing dipped from 28% to 9% as developers found it extremely difficult to deliver hous- ing within the price band. Gounden explains that the Afford- able Housing loan book has signifi- cantly shifted to sectional title units as developers opt for high-density sectionals and three- to four-storey walk-ups at the expense of the tradi- tional full title house. Affordable Housing is defined as a house that will sell for between R350 000 to R650 000, aimed at income earners in the R10 000 to R20 000 per month bracket. Gap housing com- prises housing packages for income earners in the R3 500 to R10 000 per month income band, with units sell- ing between R105 000 to R391 000. Sectional Title units are ownership within a development with an undi- vided share of the common property. NURCHA provides developer finance for units under R650 000. NURCHA rolled out 2 580 serviced sites and houses during the current financial year ending March 2015, on projectsworth just un- der R1 billion.

Gounden reports that NURCHA ap- proved 16 loansworth R246,6million, with a further three worth R125,4 million in the pipeline. Applications from existing clients increased from 36% to 50%as newdeals were signed and old ones settled. Most of the af- fordable housing projects are based in Gauteng, the country’s economic hub. NURCHA have painstakingly built on a solid foundation and rap- idly accelerated housing opportuni- ties across the spectrum. In line with the National Depart- ment of Human Settlements’ Plan to target growth areas, which includes 14 mining towns in six district mu- nicipalities across five provinces, NURCHA has assessed the infrastruc- ture and housing opportunities to finance housing delivery and has already invested R153 million. It is currently providing funding for 324 affordable housing units in Evander, Mpumalanga aswell as for 51 serviced stands in Hendrina. The loan book increased from R175 million to R233 million in the past year, increasing the loan book exposure by 33%. The deliverymodel clearly works and the Affordable Housing book has not been affected by any bad debt write-offs. It is crystal clear that Gounden has plans to drive business growth more aggressively in all areas of the coun- try. His goal is to increase NURCHA’S provincial footprint so that 40% of the loan book is disbursed outside of Gauteng by 2019. ■

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