Housing backlog in South Africa
More than 2.2-million families in South Africa live in informal settlements with no proper ablution services or running water. The majority of these people earn less than R3 500 gross incomes per month. As per the South African Constitution, housing is a right to be enjoyed by all. The National Department of Housing (NDH) has an obligation according to the Constitution to ensure that all South Africans have a decent, secure and comfortable home. Development and delivery of houses generates income and employment and therefore plays an important role in the growth of the economy. 

Housing backlog continues to grow despite the delivery of over 2.4-million subsidised houses over the past 12 years. The backlog of housing is currently estimated at between 2.2-million and 2.5-million houses across South Africa. In 2004, the NDH developed a plan called the Development of Sustainable Human Settlements, commonly known as Breaking New Ground (BNG), through which the government seeks to achieve its constitutional responsibility of ensuring that every citizen has access to permanent housing that provides secure tenure, protection and access to basic services.

Some key objectives of BNG are to eradicate all informal settlements by 2014 and the delivery of houses within the context of integrated sustainable human settlements with all social infrastructure and amenities.

Challenges
To achieve the 2014 target of eradicating all informal settlements as well as meeting all BNG targets, NDH faces challenges such as the following:

• availability of land
• slow approval process with regards to planning and proclamation of land for development
• escalating building costs; building costs within the housing market have increased by 25 percent year-on-year due to massive infrastructure projects such as the Gautrain and soccer stadiums in preparation for 2010
• sub-standard houses being constructed that have to be broken down and rebuilt
• availability of finance
• migration of rural people to cities in search of job opportunities
• Eskom’s decision to delay electricity certificates for new building projects by up to six months

Alternative technology as a solution
In an effort to speed up housing delivery, the Gauteng Department of Housing (GDH) has undertaken to complement conventional housing construction with alternative building technologies. 17 houses have been built in the Innovation Hub in Soshanguve near Pretoria, where different non-conventional building technologies are being tested.

Already, there are two pilot projects under way. One project is the construction of 858 houses in Kaalfontein extension 22, Ekurhuleni Municipality. Investec Bank Limited has partnered with Mino Global Properties (Pty) Ltd, the company that has been awarded this contract. Through this partnership, Investec is providing bridging finance to carry out the contract and deliver much-needed houses within a period of five months. The technology being used is such that houses are built using pre-cast, insulated concrete panels which are moulded in specifically designed steel moulds. The wall panels will be manufactured in a mobile plant on site and then erected on conventional foundations, joined together by specifically designed joints. The entire process from casting moulds to a completed house can take an average of eight hours and five houses can be built per day as compared to the three months it takes to build a house using conventional methods. Another pilot project is underway at Nomzamo where part-polystyrene bricks are used.

This will assist the GDH to meet its targets and provide a quality homes to the people. 'Alternative building technology is key in assisting government to accelerate the eradication of informal settlements.' said Gauteng MEC for Housing, Nomvula Makonyane. The success of this project will provide an opportunity for similar projects throughout the country and speed up the process of housing delivery, hence eradicating the backlog.               

Role of financial institutions and private sector
For housing developments to be sustainable, contributions are required from all sectors of society – government, communities, NGOs, the private sector and individuals. Access to finance remains the biggest obstacle to housing delivery. Financial institutions have committed to provide R42-billion by 31 December 2008 as per the Financial Services Charter. This was to be dealt with through a number of solutions on issues such as red-lining, bad debts and subsidy-linked bonds. To date NDH estimates that R38-billion has been expended out of the R42-billon pledge.

An Inclusionary Housing Policy has also been introduced which makes provision for the utilisation of government-owned land, and proactive engagements with the private sector and Government, who will effect mutually beneficial public private partnership arrangements. Several integrated housing projects such as Cosmo City in Johannesburg, Olievenhoutbosch in Pretoria, Hlanganani in Springs and Blythedale in KwaZulu-Natal are good examples of where the private sector and government are working together to ensure delivery of houses and implementation of BNG strategy.

For more information, contact:

Nomcebo Khoza, Project and Infrastructure Finance
Investec Capital Markets
Tel : +27 11 286 7515
Fax: +27 11 286 7200
nkhoza@investec.co.za