SA to spur low-cost housing loans

CAPE TOWN – South Africa’s government is studying requests by banks that it share the risks of proposed banking sector investment of some 48 billion rand to build more low-cost housing, an official said yesterday.

Housing Department Director General Itumeleng Kotsoane said government was negotiating with banks over the issue, which has slowed implementation of an agreement made last March to rapidly ramp up housing construction by 2008. “Currently there is no risk-sharing, but we are engaging with this…They (banks) are still saying that they will need this matter to be concluded,” Kotsoane told a parliamentary news briefing.”We are looking at other mechanisms to deal with this aspect of risk-sharing,” said Kotsoane, adding that National Treasury was handling the negotiations with banks.Housing is a key priority of President Thabo Mbeki’s government, which has promised to improve conditions in the country’s vast shantytowns which are home to about nine million people, or 20 per cent of the population.Kotsoane said the government was building houses at a rate of some 250 000 units a year, but needed to accelerate this to about 550 000 units in order to reach the goal of eradicating shantytown settlements by 2014.The availability of suitable land and a shortage of housing stock were major stumbling blocks to banks disbursing more money, he said.The 2005 agreement with Absa, First National Bank, a unit of First Rand, Nedcor and Standard Bank, committed banks to boosting home loans for people earning between 1 500 and 7 500 rand per month, mainly targeting South Africa’s black majority.Kotsoane said banks had thus far committed about 16 billion rand for low cost homes.Nampa-Reuters”Currently there is no risk-sharing, but we are engaging with this…They (banks) are still saying that they will need this matter to be concluded,” Kotsoane told a parliamentary news briefing.”We are looking at other mechanisms to deal with this aspect of risk-sharing,” said Kotsoane, adding that National Treasury was handling the negotiations with banks.Housing is a key priority of President Thabo Mbeki’s government, which has promised to improve conditions in the country’s vast shantytowns which are home to about nine million people, or 20 per cent of the population.Kotsoane said the government was building houses at a rate of some 250 000 units a year, but needed to accelerate this to about 550 000 units in order to reach the goal of eradicating shantytown settlements by 2014.The availability of suitable land and a shortage of housing stock were major stumbling blocks to banks disbursing more money, he said.The 2005 agreement with Absa, First National Bank, a unit of First Rand, Nedcor and Standard Bank, committed banks to boosting home loans for people earning between 1 500 and 7 500 rand per month, mainly targeting South Africa’s black majority.Kotsoane said banks had thus far committed about 16 billion rand for low cost homes.Nampa-Reuters