Nene targets housing in savings drive

FINANCE Minister Nhlanhla Nene has warned that given the severely constrained public finances, the Treasury will no longer subsidise the inefficient financing of low-cost housing.

Apartheid policies led to many black people living in townships far from city centres and commercial activities and this has yet to be rectified since SA achieved democracy in 1994. The current backlog of state housing is 2.3-million as more people strive to live closer to the commercial centres.

Speaking at the Banking Association of SA’s annual summit in Johannesburg on Friday, Mr Nene said given the state of public finances, the Treasury would not be prepared to subsidise "inefficient practices". He called on the private sector to get involved in the planning stages of housing provision.

"We cannot keep building houses in new dormitory suburbs on the outskirts of our cities," Mr Nene said. The government could not afford to pay for the long-term subsidy associated with keeping people living far from their jobs.

Human Settlements Minister Lindiwe Sisulu said in July that the government aimed to deliver about 1.5-million houses and "housing opportunities" over the next five years. But she added that she would like the state to step away from the large-scale provision of housing for the poor as she believed it created a "syndrome of dependency".

Sizwe Nxasana, FirstRand CEO, said the shortage of housing stock for the lower-income market had "mushroomed" to 1.3-million units. Housing delivery had declined when Ms Sisulu was previously moved as minister of housing — a position she held from 2004 to 2009.

Yusuf Patel, Basil Read MD and committee member of the South African Affordable Residential Developers Association, said over the past five years delivery of low-cost houses had dropped from between 30,000 and 40,000 units a year to about 5,000.

Speakers at the summit identified a number of serious obstacles to housing delivery. These included lack of bulk infrastructure and slow turnaround times due to red tape.

Mr Nene said it took 31-43 months to move from "land to stand", with regulation adding 20% to the cost of building housing.

But even 43 months was "optimistic", said Taffy Adler, CEO of the Housing Development Agency in the Department of Human Settlements. "We can talk of 10-year turnarounds because of regulatory frameworks."

Environmental impact assessments, for example, could cause lengthy delays.

Mr Adler called on the banking sector to do more to finance low-cost housing. "The kind of ingenuity that the banking sector internationally brought to high-end individuals, also needs to be brought to low-end individuals," he said.

- BDLive