Af­ford­able hous­ing up­lifts so­ci­ety

Build­ing homes is more than just a roof over­head as it cre­ates a se­cure fu­ture for Africa

Weekend Argus (Saturday Edition) - - PROPERTY -

IN­NO­VA­TION and col­lab­o­ra­tion are needed to pro­vide more cheap, sus­tain­able hous­ing in Africa and stop the crip­pling back­log from get­ting worse.

Run­away hous­ing prices and un­so­phis­ti­cated mort­gage sys­tems are ham­per­ing ef­forts across Africa to house its peo­ple – a sit­u­a­tion that ex­perts say is pre­vent­ing many coun­tries from reap­ing the so­cial and eco­nomic ben­e­fits that hous­ing se­cu­rity pro­vides.

Go­ing be­yond a roof over­head, hous­ing cre­ates em­ploy­ment dur­ing t he de­vel­op­ment phases, a nd im­proves qual­ity of life, so­cial stand­ing, health, fi­nan­cial po­si­tion, se­cu­rity, so­cial co­he­sion and ac­cess to ed­u­ca­tion.

The lat­est Absa hous­ing in­dex shows that in South Africa the aver­age price of small houses has risen from R660 953 in the first quar­ter of 2011 to R777 343 in the fourth quar­ter of last year. In the af­ford­able seg­ment, the aver­age price rose from R292 790 in 2009 to R345 388 last year. In both cases, there has been a 17 per­cent in­crease. In Kenya, prices in­creased by roughly 76 per­cent be­tween 2008 and last year.

Ac­cord­ing to Al­lan Kundu at the Univer­sity of Wit­wa­ter­srand, such num­bers are com­mon across the con­ti­nent. He says there are two points of con­cern.

“The first is that hous­ing is cen­tral to economies as cap­i­tal as­sets con­tribut­ing to pro­duc­tion, sav­ings, con­sump­tion, house­hold in­come, em­ploy­ment, growth of other mar­kets, so­cial wel­fare, di­ver­si­fi­ca­tion and in­vest­ment, and meet­ing a ba­sic need.

“The sec­ond is that the high prices are likely to con­demn many peo­ple to per­pet­ual squalid liv­ing con­di­tions be­cause most cit­i­zens can’t af­ford de­cent homes,” Kundu says.

In try­ing to ad­dress this con­cern, gov­ern­ments are work­ing to pro­vide hous­ing but a mas­sive back­log ex­ists through­out Africa.

This back­log must be pre­vented from grow­ing, says Marja HoekSmit, di­rec­tor of the hous­ing fi­nance pro­gramme for sub-Sa­ha­ran Africa at the UCT Grad­u­ate School of Busi­ness and re­searcher in ur­ban, mass hous­ing at St Cather­ine Col­lege, Ox­ford.

“The first step must be to pre­vent fur­ther back­logs and the spread of in­for­mal and squat­ter ar­eas,” she says. “This is far from where we are now. We have to think of mea­sures that need to be re­in­stated to get mas­sive hous­ing go­ing for at least 70 per­cent of the pop­u­la­tion.”

To do this, Hoek-Smit says, in­no­va­tive hous­ing prod­ucts must be de­vel­oped that take the lo­cal so­cial, eco­nomic and in­sti­tu­tional con­texts into ac­count, and are also sound from a busi­ness fund­ing, op­er­a­tional and risk man­age­ment per­spec­tive.

“The fo­cus must be on get­ting the pri­vate and pub­lic sec­tors to cre­ate as much new hous­ing as pos­si­ble to house new house­hold for­ma­tion,” she says. “And, this can­not be done by only build­ing in the up­per, up­per­mid­dle in­come lev­els in the hope that hous­ing will fil­ter down to low­in­come lev­els.”

For it all to hap­pen, Hoek-Smit says, there is a need for fi­nance at many dif­fer­ent lev­els. Her main fo­cus at St Cather­ine’s Col­lege is to un­der­stand the work and need of eq­uity in­vestors and how they may be en­ticed to in­vest in African hous­ing.

She also looks at in­sti­tu­tions that pro­vide con­struc­tion debt loans to de­vel­op­ers, and what they re­quire to go to scale and min­imise risk. Other ar­eas of fo­cus are rental hous­ing – an area al­most non- ex­is­tent in Africa presently – look­ing at who will pro­vide rental in­vestors with rental debt, longer-term debt and not just con­struc­tion debt; and then un­der­stand­ing how mort­gage lend­ing can be ex­panded rapidly to en­sure that de­vel­op­ers have the clients with the mort­gage to buy the de­vel­oped stock.

Ac­cord­ing to Ke­cia Rust, co-or­di­na­tor of FinMark Trust’s Cen­tre for Af­ford­able Hous­ing Fi­nance in Africa, the mort­gage mar­ket in Africa is tiny, but this means it has a lot of room to grow. The African De­vel­op­ment Bank also es­ti­mates that 20 per­cent of the African pop­u­la­tion earns more than $20 (R196) a day, which is promis­ing if mort­gage sys­tems be­come suf­fi­ciently so­phis­ti­cated to make it more af­ford­able for Africans to own their own home.

Rust says that one very in­ter­est­ing op­tion emerg­ing in Africa is hous­ing mi­cro­fi­nance.

“We work closely with mi­crolen­ders to see how we can ex­pand their scope so that we can have fi­nance for low-in­come folk,” she says. “There is a need for non- col­lat­er­alised loans from a va­ri­ety of schemes for peo­ple who don’t have the steady in­come, em­ploy­ment se­cu­rity, and ten­ure se­cu­rity needed to se­cure con­ven­tional mort­gage loans.

She says that mi­cro-lenders are in­creas­ingly com­ing to the mar­ket, but there needs to be reg­u­la­tory sup­port to take their in­vest­ments to scale. “What we re­ally need is cheaper houses, and we need the govern­ment, lenders and de­vel­op­ers to start talk­ing across the con­ti­nent to find ways to build cheaper homes in a sus­tain­able way.”

Rust s ays p r i vat e hous­ing fi­nance in­sti­tu­tions, govern­ment fi­nance and hous­ing agen­cies, aca­demic and in­ter­na­tional de­vel­op­ment in­sti­tu­tions from emerg­ing and es­tab­lished economies need to un­der­stand all the key is­sues and con­cepts in hous­ing fi­nance. They need to un­der­stand the dif­fer­ent con­texts, the de­sign of dif­fer­ent hous­ing prod­ucts avail­able and the busi­ness mod­els needed to pro­vide such prod­ucts ef­fec­tively and sus­tain­ably.

“We need to help peo­ple in the fi­nance sec­tor un­der­stand the full im­pli­ca­tions of the in­no­va­tions tak­ing place in hous­ing fi­nance, and pro­vide them with the in­sights needed to en­sure that creative and sus­tain­able so­lu­tions are im­ple­mented per­fectly in the sub-Sa­ha­ran African con­text.

“If the sys­tem is to be so­phis­ti­cated enough to erad­i­cate hous­ing prob­lems, then ev­ery­one in­volved, from lenders to de­vel­op­ers and even sales, need to be on the same page,” says Hoek-Smit.

“Af­ford­able hous­ing is more than just pro­vid­ing a ba­sic need to the poor. It helps cre­ate a sus­tain­able so­ci­ety that nur­tures the growth and de­vel­op­ment of its peo­ple, where the qual­ity of life and ac­cess to ameni­ties that im­prove lives are de­vel­oped. The pop­u­la­tion, rather than get­ting by, ac­tu­ally flour­ishes.”

The hous­ing fi­nance pro­gramme for sub-Sa­ha­ran Africa at the UCT Grad­u­ate School of Busi­ness will be held from Oc­to­ber 7 to 12. For more in­for­ma­tion, call Ce­leste Wil­son on 021 406 1238 or send an e-mail to ce­leste.wil­son@gsb.uct.ac.za.

CON­STRUC­TIVE FU­TURE: Con­struc­tion is un­der way at Aurora Vil­lage in Bel­har, As­rin Prop­erty De­vel­op­ers’ joint ven­ture af­ford­able hous­ing pro­ject with In­ter­na­tional Hous­ing So­lu­tions.

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