Affordable Housing Strategic Session

The Western Cape Minister of Human Settlements, Bonginkosi Madikizela, today delivered the opening remarks at the Western Cape Department of Human Settlements Affordable Housing Strategic Session at the Fountain Hotel, St Georges Mall, Cape Town. The session was attended by developers, banking institutions, social housing institutions and government.

"We are a well-known department, and are mostly well known for providing free houses. Yet we need to strike a balance, and make a paradigm shift in how we provide houses in South Africa. The development of affordable housing is one of the paradigm shifts we have to make."

"According to the latest statistics, we have around 3.5 million taxpayers, and around 17 million grant recipients. We have to move towards a situation where we have more people contributing, and less people on welfare, for the current approach is simply unsustainable."

"It takes around 11 grants to put together a house. The national allocation for housing is around R15 billion, and we need to avoid situations where we create poverty traps for municipalities by building free houses in which people do not contribute to rates and services, to providing houses where people can at least contribute something."

"We know there around 300 000 people who need houses, and earn between R6 500 and R12 500 a month, and we need to plan for these people and provide houses for them. We are not here to reinvent the wheel today. There are a number of developers who are doing some very good work, and we need to ask ourselves what kind of support we can offer as a state to the developers, so that some of these 300 000 people can be catered for. We do not need to do what the developers do very well, but rather to support them in providing opportunities for the above market, at a lower cost."

"We also need the banks to come on board, so that they can play a meaningful role in helping people finance their houses. Without the finance offered by the financial institutions, people will not be able to access the extra capital needed to buy the houses. It is through lowering the costs of development through government subsidies, and working closely with the banks, that the above market will be able to buy their own homes."

"We have made some changes in how we use the FLISP (Finance Linked Individual Subsidy Program), which helps lower the cost of bonds for people earning between R3 500 and R15 000 per month. Even with the contribution of the FLISP, a gap in service delivery still exists, and we are still not able to adequately service this market, as the costs of development are still too high to provide affordable opportunities."

"Today, we need to understand why many people cannot get bank loans to buy houses. We also need to understand why the government is still spending so much of its budget providing free houses that become poverty traps. We need developers to help come up with solutions to provide affordable developments. We need to understand what we need to do in consumer education and the importance of being a home owner, because many people get free houses and sell them in a few months after getting them. When used correctly, a house can be used to escape poverty."