Housing in Southern Africa October 2015

Housing

Growth in affordable housing

escalated to R150 000 excluding VAT. His message to investors/buyers and the banks is that investors or buyers need to look at the returns and be prepared to pay a premium for good stock with strong growth potential. Low construction costs as well as cheap land deals and low city council costs are a thing of the past. On rentals, Crous notes that high density units are preferred, provided that they are well located have life style facilities, security and children’s play areas. Getting the rental price right is by far the most important factor. “Cosmopolitan have been focus- sing on the delivery of high and low density rental stock since 2009. It works well to target this market seg- ment,” he said, “that does not want to buy or that cannot buy because of debt.” In the next three to five years Crous is confident that the demand for affordable housing and rental will continue. Even though higher interest rates and inflation will keep develop- ers’ profit margins low. The sector will be hampered by high bulk con- tributions and servicing standards required by councils. And, week GDP growthwill put pressure on individual income growth, which in turn will be reflected in the selling prices. Crous acknowledged the support that the banking sector has played in the industry and concluded that affordable housing projects will re- main focussed on price, loan to value and rental yields being acceptable to banks. ■

Developers, contractors, industry stakeholders, equity funders and the banking sector recently attended the International Housing Solutions 7th annual Affordable Housing Conference at the Johannesburg Country Club. This is a highlight on the housing calendar as it attracts major role players in the affordable housing and rental market.

S peaking on affordable hous- ing opportunities within the next three to five years, Anton Crous from Cosmopolitan Projects discussed the challenges facing de- velopers. He said that full title entry level housing must be functional, built to required specifications and sizesmust also include energy saving elements. Of course, he explained, this comes at a price and still has to be a value proposition for the banking sector. Nowwith the new regulations, the developer has to consider the locality, infrastructure and proximity to job opportunities and essential amenities such as schools, shopping precincts, transport nodes, as well

as offerings to the affordable housing sector that includes affordable secu- rity villages, erf sizes and packages. The greatest development chal- lenges is incorporating bulk service contributions, which have increased annually by double digits. The lack of capacity and infrastructure for bulk services and council’s unreal- istic service standards means that many projects are not undertaken, which impacts negatively on housing delivery. Crous gave an example that in 2012 a 200 m² stand was delivered for R90 000 excluding VAT. Three years later the same land in the same town- ship andwith the same land price, has

October 2015