26 June 2006
(FNB) and the Gauteng Department of Housing are co-operating to close the gap that exists in South Africa’s affordable housing market.
FNB, one of South Africa’s “big four” retail banks, launched a R800-million housing development last Thursday that will see more than 3 000 houses being built in a new Soweto suburb to be called Glen Ridge.
Each housing unit will consist of three bedrooms, a bathroom, kitchen and lounge at the cost of R168 000 (all inclusive).
Construction will begin in July, with the first batch of houses to be available from as early as October.
The project is split into commercial property finance (to fund developers to build the houses) and end-user finance in home loans for potential buyers to address the challenge of access to credit.
FNB has set aside approximately R500-million to provide finance for the buyers, and R300-million for established property developers to build the houses.
The initiative is in line with an agreement the government signed last year with the country’s four major banks – FNB, Absa, Standard Bank and Nedbank – under which the institutions committed themselves to pouring R42-billion into the country’s low-cost housing market.
Gauteng Housing MEC Nomvula Mokonyane commended the bank for helping ordinary South Africans to acquire homes through innovative home loan products.
“Our role as provincial government will be to provide housing subsidies as equity to ensure affordability and quality houses for people in the middle to low income bracket,” Mokonyane said.
Township development has in the past had limited appeal for developers because of difficulties involved in selling the properties.
However, FNB chief executive officer Michael Jordaan said the collaboration between the banks and the government would make the provision of finance to buyers far smoother and the initiative an attractive one for developers.
Last month, FNB unveiled a R368-million project to build more than 1 000 affordable houses at Cosmo City, north of Johannesburg. So far this year, the bank has ploughed approximately R1.7-billion into affordable housing developments.
Jordaan emphasised that supporting South Africa’s previously under-serviced housing market was not merely about “ticking FSC [Financial Sector Charter] target boxes.”
It was a business imperative, he said, for the country’s banks to contribute to the sustainable development and economic well-being of the communities they served.