Housing in Southern Africa March 2015

News

New transport nodes accelerates housing delivery The establishment of transport nodes across South Africa has resulted in awave of newaffordable housing developments being built in close proximity, according to Manie Annandale, Head: Nedbank Corporate Property Finance’s Affordable Housing Development Unit.

financing.” Annandale says that he ex- pects the delivery of affordable hous- ing developments to accelerate going forward as Government continues to release public-owned land. According to recent announcements by theMin- ister of Human Settlements, Lindiwe Sisulu, the aim is to build 50 mega projects that comprise of 2 000 and 4 000 new homes. This will roll out over the next five years as part of national government’s social contract with the private sector across all spheres of business. “One of the mechanisms through which this deliverywill be accelerated is via Public-Private Partnerships (PPPs) between government, devel- opers and the banks. Government subsequentlyworks closelywith large developers to unlock tracts of land, with the bank providing the funding,” says Annandale. He concludes, “There is an urgent need in South Africa to deliver more affordable housing tomeet the socio- economic demands of the country and we are confident that with all stakeholders successfully working together in a collaborative manner, wewill continue tomeet this pressing requirement.” ■

H e says that developers have recognised the growing de- mand for affordable housing that is located close to newly devel- oped roads or transport systems, such as the Gautrain; the Rea Vaya Bus Rapid Transit system in Gauteng; and the MyCiti bus service in the Western Cape. “The provision of transport is crucial in shaping purchasing and renting decisions. Affordable housing is driven by the availability of suitable land and as this cost increases, so too does the building of higher density developments that can best optimise these transport nodes.” He adds that with forecasts sug- gesting that 70% of South Africa’s populationwill be urbanised by 2030, there is an increased focus on how best to accelerate the development of public transport infrastructure to reach other areas in major cities. One such example is the south of

Johannesburg, which still has tracts of under-developed land that can be made available for affordable hous- ing developments. Annandale says in recent years there has also been a notable trend towards the lower income bracket renting rather than buying afford- able housing property. “When the Nedbank affordable housing book was established six years ago, these developments soldout pretty quickly. This has changed significantly over the last few years, with rentals now dominating and more than 60% of units are being rented in develop- ments that we are currently funding.” He goes on to explain, “The issue is that it can be difficult to prove af- fordability for many buyers. Often up to 30% of their disposable monthly income can be absorbed by transport costs, so to factor in rates and taxes, as well as a bond payment, means potential buyers may not qualify for

March 2015