27 October 2011

South Africa: MEC Says Affordable Housing Still a Challenge

press release

Gauteng Department of Local Government and Housing MEC Humphrey Mmemezi said middle income households still face a challenge of accessing funds for affordable housing. He says promotion of vibrant and effective partnerships is urgently needed to address the funding challenge.

MEC Mmemezi was speaking at the meeting of the Gauteng Partnership Fund (GPF), where he addressed the leaders from the banking sector and social housing property developers in the province. GPF, which is the agency of the Department of Local Government and Housing, was established in 2002 with the mandate to design innovative funding structures that would enable a sustainable involvement of the private sector in the funding of social and rental housing in Gauteng.

Mmemezi said funding constraints experienced in the unlocking of housing developments are more pronounced in the lower income segment of the affordable housing sector.

"The households with monthly income that falls below R15 000 are the mostly affected group who end up renting. We have long identified funding as an issue needing to be addressed as part of the whole bouquet of interventions in the realisation of the provincial sustainable human settlements objective. To this end we sought to involve the private funding institutions with the noble realisation that the state resources alone could not even start to make a sustainable impact," said Mmemezi.

Mmemezi said the objective of the department is also to provide close to 20 000 rental housing stock by 2014. He said it is an ambitious target, but convinced that with the kind of partnerships that the GPF is fostering this goal is achievable, and may even be exceeded.

Dr. Llewellyn B. Lewis from the BMI Building Research Strategy Consulting said affordable housing makes 78% of housing needs.

Gauteng Partnership Fund CEO Kutoane Kutoane said for some time the banking sector had been reluctant to fund in the low income housing market due to perceived high risk associated with the low end housing market segment.

"GPF has been a key player in the facilitation of affordable housing developments and we have focused our programmes on mobilisation of private sector funding to address the funding constraints that are experienced by social housing providers and affordable rental housing developers in putting up good quality and well located housing developments," said Kutoane.

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