Housing the Nation

Business Day (Johannesburg) EDITORIALFebruary 13, 2007 Posted to the web February 13, 2007 Johannesburg
THE delivery of low-cost housing has long been one of government's toughest challenges.
No matter how fast SA builds houses, more are needed, to the point where the housing backlog has actually risen in recent years.
President Thabo Mbeki's frustration was clear in his state of the nation address on Friday. Despite funding 300000 new subsidies over the past two years, he said, the pace of delivery was much slower than expected and had to be addressed.
Government can no longer point to the banking sector as a key factor in stalling the process. Last year, government and banks reached agreement on how to proceed with the R42bn banks had promised to lend in low-income home loans as part of the financial sector charter. While it seems that not all elements of this agreement have been implemented, the banks have clearly tried to come to the party.
Almost half of the agreed amount has been lent into the lower end of the market -- funding people who earn between R1500 and R7500 a month. Banks are also looking into more innovative ways of lending, such as extending the lending term and implementing a stepped-rate product where the initial interest rate charged is below the market rate but increases over time. Both will require educating customers, but the point is the banks seem to be attempting to pull their weight.
So why are we not beating the problem of homelessness? It's partly due to large-scale migration of people from the rural areas to urban centres. The fact that many construction companies left the industry during the lean times has not helped. But principally, there is not enough available land on which to build low-income homes.
So government's plan to set up a special purpose vehicle to buy land for housing and speedily release it for development seems sensible. But it needs to get on with it. Agitation for homes is growing along with the backlog. People have been patient for far too long.

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