SA Affordable Housing November / December 2016 // Issue: 61 - Page 10

NEWS Need for affordable housing defies economic slump Despite South Africa's economic turbulence, opportunities continue to exist. The affordable property industry is one of them, especially when looking at The Vines in Eerste Rivier as an example. Artist’s impression of what The Vines will look like once complete. Image: Power Group I n recent years, the housing demand among low and mid-income earners has outstripped the supply. This makes it one of the most interesting segments of the South African property sector, local industry leaders say. Recent figures by Statistics South Africa have shown that, in the first three months of 2016, the country's Gross Domestic Product (GDP) declined by an annualised 1.2%, compared to a 0.4% growth over the last quarter of 2015. Culprits include job losses and a shrinking farming and mining output. There was some positive news too: the building sector for instance, saw its GDP contributions increase by 0.5%. Gary Power, marketing director of Power Developments, says, “The growth is no surprise. We have been developing affordable housing projects as usual, despite some tough macro-economic conditions with a spike from an affordable or GAP housing point of view.” Referring to the residential property sector that caters for individuals who earn too much to qualify for a government-subsidised home and too little to access the open bonded market. 8 NOVEMBER - DECEMBER 2016 AFFORDABLE SA HOUSING Government is trying to move away from the ‘hand out mentality’ related to free government housing known as BNG or Breaking New Grounds (previously RDP). Government is trying to move towards Financially Linked Individual Subsidy Programme (FLISP), and GAP housing for people earning above the BNG threshold of R3 500 and earning a maximum of R15 000 household income a month. The reality however is that purchasers are able to afford bonds if they earn R10 000 or more a month. This leaves a gap in the market between the R3 500 and R10 000 income earners. “The demand for affordable homes has not declined - on the contrary it is set to only increase over the next few years. There aren’t many new homes available in the R300 000 to R650 000 price range, while the demand is certainly there,” he continues. “People who spend R4 200+ per month on rent often want to own their own house, but don't have much choice or struggle to access bank finance. Prospecting home owners who can't apply for government-subsidised housing because their income is too high and those who don't earn enough to buy a bonded home, are stuck between a rock and a hard place.”