Housing in Southern Africa

NURCHA’s rapid growth

A string of well-priced housing opportunities easily accessible

to work opportunities and quality housing has contributed to

NURCHA’s well-deserved reputation. FundingAffordable Housing,

Gap, Sectional Title and high-density forms part of NURCHA’s

portfolio.

he Affordable Housing pro-

gramme has been a steady

contributor to NURCHA’s finan-

cial results and a significant player in

the National Department of Human

Settlements to achieving the Out-

come 8 goals.

NURCHA, government’s imple-

mentation arm and development

finance institution, has provided Af-

fordable Housing developer funding

of R1,74 billion to deliver 38 326 hous-

es during its 12 years in existence.

The Affordable Housing Pro-

gramme provides finance to contrac-

tors and developers specialising in

housing under R650 000 and par-

ticularly Gap housing. And NURCHA

offers favourable and competitive

short term loans in this niche mar-

ket segment. The dynamic team of

professionals at NURCHA recently

held a number of roadshows across

the country to attract new business,

expand their presence in tough eco-

nomic conditions, and showcase a

variety of their product offerings. This

included the Emerging Contractor De-

veloper Programme for new entrants

to the sector.

With a loan book of R600 million,

DeanGounden, ProgrammeManager:

Affordable Housing, says: “We have

made inroads in seeking new clients

in other provinces as well as forging

closer relations with provincial and

national departments of Human

Settlements.” He explains that the

key to growth in the Affordable Hous-

ing Programme is the provision of

development finance for sectional

title units up to R650 000. “We have

seena steady growth in the afford-

able sectional titlemarket and

would like to significantly

grow this market seg-

ment.”

In the current financial year,

NURCHA has increased its sectional

title market share from 9% to an

impressive 41%. The loan spread

includes: full title affordable hous-

ing at 50%, down from the previous

year’s 63%, and Gap housing dipped

from 28% to 9% as developers found

it extremely difficult to deliver hous-

ing within the price band.

Gounden explains that the Afford-

able Housing loan book has signifi-

cantly shifted to sectional title units

as developers opt for high-density

sectionals and three- to four-storey

walk-ups at the expense of the tradi-

tional full title house.

Affordable Housing is defined as a

house that will sell for between R350

000 to R650 000, aimed at income

earners in the R10 000 to R20 000 per

month bracket. Gap housing com-

prises housing packages for income

earners in the R3 500 to R10 000 per

month income band, with units sell-

ing between R105 000 to R391 000.

Sectional Title units are ownership

within a development with an undi-

vided share of the common property.

NURCHA provides developer finance

for units under R650 000. NURCHA

rolled out 2 580 serviced sites and

houses during the current financial

year ending March 2015, on

projectsworth just un-

der R1 billion.

Gounden reports that NURCHA ap-

proved 16 loansworth R246,6million,

with a further three worth R125,4

million in the pipeline. Applications

from existing clients increased from

36% to 50%as newdeals were signed

and old ones settled. Most of the af-

fordable housing projects are based

in Gauteng, the country’s economic

hub. NURCHA have painstakingly

built on a solid foundation and rap-

idly accelerated housing opportuni-

ties across the spectrum.

In line with the National Depart-

ment of Human Settlements’ Plan to

target growth areas, which includes

14 mining towns in six district mu-

nicipalities across five provinces,

NURCHA has assessed the infrastruc-

ture and housing opportunities to

finance housing delivery and has

already invested R153 million. It is

currently providing funding for 324

affordable housing units in Evander,

Mpumalanga aswell as for 51 serviced

stands in Hendrina.

The loan book increased from

R175 million to R233 million in the

past year, increasing the loan book

exposure by 33%. The deliverymodel

clearly works and the Affordable

Housing book has not been affected

by any bad debt write-offs.

It is crystal clear that Gounden has

plans to drive business growth more

aggressively in all areas of the coun-

try. His goal is to increase NURCHA’S

provincial footprint so that 40% of

the loan book is disbursed

outside of Gauteng by

2019.

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