Guiding consumers since 2009

Lower income property market could boom

By Staff Writer

There is some good news for the property industry as experts believe the next ‘boom' might be affordable housing.

The so-called gap market, which comprises from households which earn between R3500 and R15 000 per month, has been risky for both developers and financial institutions, however, industry players are now falling over themselves to help accommodate this segment of the market.

This gap market usually earns too much to qualify for an RDP home and too little to be able to apply for home loan and experts believe that there is a 600 000 to 800 000 shortage of homes in this market.

Rob Wesslo, country manager for International Housing Solutions (IHS), the affordable housing market is the only segment showing attractive growth in the property industry.

The IHS SA Workforce Fund recently raised R1.9bn for investing in South Africa's real estate, with the focus being on the affordable housing market. The aim is to provide 35 000 affordable units to rent by 2018.

IHS say that only around 20 000 units are supplied per year by the government and some private investors which is not enough to make a dent in the backlog.

"You don't see business queuing for the commercial or industrial sector, but there are queues for this segment because there is such a shortage.

"It's clear there's a need. There's been a perception that people in this market don't pay rent, but if your asset management is good this can be an excellent investment," said Wesselo.

Banks are also joining with FNB and ABSA both providing ways to finance homes in the lower income market.

"Research told us that only about 15% of the country's households had access to home loans," said the unit's CEO, Marius Marais on Wednesday.

FNB offer a Smartbond package which gives 100% home loans to households earning between R3500 and R15 000 per month.

Despite the recession, FNB's profit from end user finance in this market grew by 84% in the 2009/2010 financial year.

"We see this as a great market, there's massive demand and a proven business model," said Marais.

Recent Articles

Featured Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?

How to finance and insure a second-hand vehicle

Buying a second-hand vehicle may suit your budget better than acquiring a new one. But what impact does an older model have on vehicle finance and car insurance? We reached out to specialists in the field to explain what the financial implications are of pursuing a second-hand vehicle.

Reading your loan agreement: look out for this

Many people don’t read their loan agreements. They just sign on the dotted line without realising that they could be signing their lives away. But it’s important to review your loan agreement before and after taking your loan to avoid future setbacks.

 

Part 1: The difference between good and bad debt

In the first part of our Debt-ucate series we explore the difference between good and bad debt and why debt is, in fact, necessary.

Deals

Udemy online course for R180

Price: R180
When: Until 27 March 2020
Where: Online

Educate your kids for free with Skills Share

Price: Free
When: Daily
Where: Online

Take advantage of payment holidays from Standard Bank and Nedbank

Price: Free
When: From 1 April to 30 June 2020
Where: Nationwide