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Boosting Housing Finance in South Africa: Strategies and Initiatives

This conference explores the rise of housing finance in South Africa, addressing opportunities and challenges in the sector. Statistics reveal the progress made in building houses for low-income individuals. The financial sector charter highlights the commitment to transformation and economic empowerment, with substantial investments and loans issued by the banking sector. Project Sizwe is a housing initiative aimed at transforming the low-income housing market through consumer education and efficient subsidy mechanisms. The conclusion emphasizes the need for improving land registration, municipal efficiency, and reducing costs to incentivize developers. Public-private partnerships and government support are deemed critical for progress.

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Boosting Housing Finance in South Africa: Strategies and Initiatives

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  1. The Banking AssociationSouth Africa WORLD BANK CONFERENCE ON Housing Finance Systems in Emerging Economies  2nd World Bank Group Conference 15 March 2006

  2. The Rise of Housing Finance: Opportunities and Challenges in South Africa Cas Coovadia Banking Association , SA

  3. SOME STATISTICS • 1,698,788 houses built for low-income people since 1994 • Budgetary allocation: • R23 billion ($3.72 billion) allocated for housing subsidies for 500 000 units for next 3 years • Transfer duty abolished for houses under R500,000 ($81 000) – Budget 2006 Cas Coovadia Banking Association , SA

  4. SOME STATISTICS - cont • About 7 million households unable to afford credit for housing • Backlog of 600 000 units amongst those earning between R1500-R7500 per month ($243-$1215) • Need delivery of about 133 000 units per year in next 5 years to meet 60% of backlog • Only 15 000 units per year being built currently Cas Coovadia Banking Association , SA

  5. FINANCIAL SECTOR CHARTER • Banking sector strategy for transformation and broad-based black economic empowerment (BBBEE) • Commitment of R42 billion ($6.8 billion) over 5 years • Sector has issued loans in last 2 years of R17 billion ($2.75 billion) • Project Sizwe Cas Coovadia Banking Association , SA

  6. PROJECT SIZWE • Housing initiative: banking sector/government • Transformation of low-income housing market • Elements: • Consumer education • Making subsidies efficient • Fixed-rate mortgage/conduit • Loss insurer Cas Coovadia Banking Association , SA

  7. CONCLUSION • Supply-side challenge • Make land registration and servicing more efficient • Improve municipal government efficiency • Reduce holding costs • Incentivise developers • Public, private partnership (PPP) • Government support critical Cas Coovadia Banking Association , SA

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