South Africa’s affordable-housing programme is maturing, but the delivery pressures are mounting
This was one of the main conclusions of the ‘Report of the Task Team of Members of Parliament Probing Violence and Attacks on Foreign Nationals’ released in late June, highlighting, once again, the importance of housing delivery in safeguarding social stability.
It is not a new realisation, though. After the 1994 transition to democracy, it was generally accepted that it was imperative to stabilise housing provisioning, to overcome the fragmented housing regime with its skewed racial focus and to immediately start delivery.
Indeed, the African National Congress’s Reconstruction and Development Programme (RDP) noted that the lack of adequate housing and basic services in urban townships and rural settlements had “reached crisis proportions”. It went on to endorse the principle of ‘housing as a human right’, adding that one of “the RDP’s first priorities is to provide for the homeless”.
On average, 250 000 subsidised houses were built every year in the last four years. In addition to this, houses have been provided through innovative access to housing finance through, for example, the National Housing Finance Corporation (NHFC) and the banking sector’s R42-billion Financial Service Charter commitment to the affordable housing market.
But while much was done, the competing demands of affordability and quality at times became insurmountable and corruption levels were also serious. In addition, the focus on housing was such that too little attention was given to the siting of these homes, particularly in respect of access to centres of employment, and more especially the supporting social and economic infrastructure.
Nevertheless, the focus has remained and the programme has been evolving both in terms of scale and delivery objectives. And while the numbers fail to tell even half of the story, it is possibly still worth reflecting on where these stand.
The Numbers
From 2004, government’s housing expenditure increased from R4,8-billion, to R9-billion, in 2007 and 2008, representing an average growth of 23,2% a year.
The housing budget is projected to grow from R9-billion last year to R10,6-billion in 2008 and 2009, and R15,3-billion by 2010 to 2011, at an average of 19,4% a year.
The target remains the eradication of all slums, or informal settlements, by 2014. For this to happen, some 500 000 new units a year must become available, according to the Depart-ment of Housing’s Strategic Plan 2008 to 2011.
The focus has also changed from building housing stock to the notion for integrated settlements, based on an acknowledgment that, while RDP houses were the fist step towards housing millions of South Africans who had been left without adequate shelter, the outcomes were flawed.
The early-generation policy led to building rows of houses on the outskirts of towns and cities, which merely replicated apartheid-style housing.
Following Cabinet approval, the Breaking New Ground (BNG) initiative kicked off in September 2004. It was launched to establish integrated, sustainable human settlements and is being implemented in all nine provinces.
BNG aims to create nonracial, diverse communities and offer a choice of housing, from government-subsidised housing, affordable bonded houses with a supply of rental accommodation for those not yet ready to buy a home or people who have left behind a BNG home in another city or province.
An evaluation of the impact of BNG, which was undertaken in 2006 by KPMG, concluded that continuing with the current trend in the housing budget would lead to a funding shortfall of R102-billion in 2012, which would increase to R253-billion in 2016 to eradicate the housing backlog.
BNG approached housing delivery in a more sophisticated way. The economic benefits were no longer merely limited to the job-creation spin-offs. The emphasis shifted to assert the role of houses as assets, with title deeds assisting in the development of the secondary market.
This approach means that houses can be traded or used to ensure the security of a family. Either way, the house becomes a tool in poverty alleviation. This shift is fundamental as a home is at the heart of every community, of every society.
Flexibility and mobility are also key ingredients, which is why it is now also permissible to sell a subsidised house after five years.
The current policy also saw the size of the house raised to 40 m2, up from 28 m2
More Than Just Little Boxes
Housing Minister Lindiwe Sisulu tells Engineering News that the various reviews showed that integrated, sustainable human settlements, where people live near work opportunities, close to schools, clinics and other amenities, were crucial in shaping current thinking and policy.
She adds that, concurrently, measures have been taken to upgrade informal settlements or by relocating people to safer areas. At national government level, integrated transport plans and the draft national urban strategy aim to harmonise how cities and towns function.
A number of policy and legislative measures have been improved on: consumer protection, social housing and rental regulations, besides others. The latest Bill is on the establishment of the Housing Development Agency, which will identify, coordinate and manage the acquisition of State-owned or private land for housing developments, with the additional aim of minimising red tape.
Under the Financial Services Charter, and a subsequent memorandum of understanding, the banking sector pledged R42-billion towards affordable mortgage products.
“Unaudited figures at present indicate that the banks are on track to meet their commitments. Social compacts like this one are vital to meet the housing challenge on all fronts. Government is committed to playing a leading role, but it cannot do it alone – the private sector must come on board,” emphasises Sisulu.
She concedes that it is true that a number of the large construction companies have left the affordable-housing sector. In various interactions with the private sector, from banking to construction, the high cost of land and red tape, which can delay approvals for up to three years, have emerged as factors.
“Government committed itself to unblock- ing bottlenecks slowing down delivery and, in turn, the private sector is ploughing back into housing. The undertakings of the Social Contract include a commitment from the construction sector to ensure houses are delivered at scale to ensure that by 2014 South Africa is free of slums.”
Challenges Remain
The cost and availability of well-located, suit-able land for housing remain a key challenge.
It is not in the interest of overcoming South Africa’s past inequalities to continue apartheid- era town planning. It’s vital that the poor are not left on the margins, but are integrated into society, near to work opportunities, schools and health and leisure facilities.
“Reaching the target of 500 000 new housing opportunities requires funding of R345-billion by 2014, if we integrate the delivery of infrastructure and basic services. We are lobbying for a one-off injection to the budget to kick-start the process of boosting housing delivery,” Sisulu reports.
On another level, the migration of people from rural to urban areas and to the economic powerhouses in Gauteng, KwaZulu-Natal and the Western Cape also presents challenges as the number of people looking for housing increases. There is increasing demand for affordable rental stock, as many would already have houses in their home cities and provinces.
Another challenge is that people that get government houses are selling them off and the department has, therefore, implemented initiatives to conduct occupancy audits to establish if the original beneficiaries of the houses still live in them.
“We have been concerned about the inci- dence of the sale of our houses. Our laws prohibit this, but the practice goes on. As an urgent measure, we have decided to enlist the services of the Special Investigations Unit to take action against the practice,” Sisulu told Parliament last month.
Construction Materials
Another area of serious concern is building materials inflation, where government has already indicated that it plans to get tough through competition policy. But it could also seek to combat the inflation of construction materials by using its buying power in a more concerted way.
The BNG housing programme alone is by far the largest supplier of residential property in South Africa and, therefore, there is a con- siderable demand base for material supply.
The Department’s affordable housing programmes alone provide about 260 000 dwelling units a year. Home enrolments by the National Home Builders Registration Council show that the delivery by the private sector is about 78 000 houses a year.
PPC’s projections for cement demand indicate that the BNG housing programme demands more cement than the Gautrain, and 2010 FIFA soccer World Cup, Airports Company South Africa and Department of Water Affairs and Forestry infrastructure projects combined.
“On overall construction material prices, deflation is not likely to happen in the near future. The average building material inflation recorded was 11% in 2007, from 7% in 2006. Demand for construction material is expected to remain strong. The housing delivery under the BNG programme is ready to accelerate to deal with the backlog and other government infrastructure projects, which are expected to be imple-mented beyond 2014. The housing property market is also projected to regain momentum in 2009,” adds Sisulu.
She believes that if the substantial hikes in the cost of conventional building materials are not dealt with appropriately, they will pose a serious threat to the sustainability of government’s interventions to deal with the housing challenge.
“In order to tackle this issue, my department is undertaking investigations in respect of the use of alternative building technologies which will meet all the requisite standards for quality, norms and standards and still facilitate rapid housing delivery. The interventions will start with appropriate measures to popularise and destigmatise some of the technologies, which have now been tested and implemented at scale in other countries.”
Energy Crisis
Sisulu reassured South Africans, earlier this year, that electricity supply shortages would not affect new residential property developments requiring less than 100 kVA and low-income housing projects.
“The power supply challenges cannot be allowed to affect housing delivery to South Africa’s poor and government’s commitment to improve the living conditions of its citizens,” she said.
State-owned power utility Eskom said it would begin quoting customers for new connections or upgrades above 100 kVA. Power consumption of 100 kVA is about the same level of consumption of a large residential house.
However, it added that these connections would only occur as quickly as capacity became available on the system. “Our operating reserve margin is such that Eskom cannot accommodate any new connections unless space is created on the system,” CE Jacob Maroga said.
“Resuming the provision of quotations for requests above 100 kVA is a key step that should enable developers to advance their planning and better understand the constraints involved,” Maroga added.
Criteria for the allocation of capacity above 100 kVA were being developed.
New-Era Housing Projects
The new way of thinking is also starting to have an impact on the way projects are delivered, with scale, quality, and infrastructure receiving attention.
This has also opened the sector to the large, well-established con- tractors, including entities such as JSE-quoted construction firm Basil Read, which recently signed a partnership agreement with State-owned financier NHFC to develop low- to middle-income housing, with construction on the first project on which the two will collaborate set to start soon.
The R1,25-billion development situated near Welkom, in the Free State, will include 6 000 housing units, 40% of which will cater for the low-income market – or households that earn less than R3 500 a month – Basil Read Developments MD Desmond Hughes said.
Gold major Harmony Gold, which owns mines nearby, contri-buted 100 ha of land to the project, and the local municipality made 500 ha available.
One-tenth of the units will be for rental, and one-quarter will be credit linked, which is where the NHFC will step in.
NHFC CEO Samson Moraba said that the partnership would help to alleviate a “huge backlog” in housing for South Africa’s low-income bracket. He said that the Welkom housing project, called Phakisa Estate, was just the beginning of the partnership with Basil Read.
Basil Read is currently developing phase two of Cosmo City, which is a R3,5-billion mixed-land-use development for lower-income households north of Johannesburg.
The development includes fully subsidised houses, fully bonded houses and apartments for rent. The 1 200-ha development also features several schools, churches, shopping centres and a taxi rank. Completion is scheduled for 2009. Basil Read has already constructed more than 11 490 units, at Cosmo City.
But Basil Read and the NHFC are not alone in targeting the sector, with specialist mass housing groups, such as Sea Kay and RBA, having either listed on the JSE or beginning to make their presence felt.
The list of new-generation projects is also growing. The sod-turning ceremonies for the Kagiso and Droogeheuwel/Middelvlei integrated housing projects on the West Rand took place last month; the N2 Gateway project is well under way; and a slew of others are either at an advanced stage of planning or under way in just about every province.
But the process is not without hitches, and there have been particular problems in the Western Cape, where there are more than 220 informal settle- ments in Cape Town alone, with more than a million citizens currently living in shacks.
Cape Town’s housing backlog is estimated to be more than 400 000 families. The N2 Gateway is a pilot project that will deliver between 22 000 and 30 000 homes.
It is a multisite project, with a number of separate building sites on land parcels situated adjacent to the N2 freeway.
The project is expected to pave the way for the eradication of all informal settlements. It is defining the redevelopment path for informal settlements across the rest of the city and the country, but the project will not transform all informal settlements on its own.
The N2 Gateway project has delivered about 4 500 temporary relocation units, which are fully occupied. Residents of informal settlements relocate to temporary relocation units (TRAs) to make space for the developers, and then relocate into their permanent new homes. All TRAs are fully occupied, with residents replaced by new arrivals from informal settle-ments as they vacate the units to move into their homes.
The project is over budget for a number of reasons. Among the first causes of budgetary overspend is the scale of earthworks required to rehabilitate the former dump site of Joe Slovo. Construction delays result in building material and labour cost increases. Litigation, in respect of the Delft invasion and the Joe Slovo relocation, has been expensive and resulted in further construction delays.
Lack of experience in tackling such huge public housing projects, since the N2 Gateway is the biggest public housing project in South Africa’s history, has been a factor, more than skills shortages or material availability.
The project is ambitious and far sighted. It seeks to develop sustainable human settlements for the future rather than focusing purely on the delivery of masses of tiny identical homes in only poor communities. It seeks to deliver houses, security, comfort and dignity.
Way Forward
Legislation is to be introduced at provincial level to improve the ability to regulate the growth of informal settlements, since the housing programme is often undermined by the unregulated mushrooming of informal settlements, which counteracts the progress that is made.
This will be finalised by December.
“By November 2008, we will try to conclude the measures to assist rural and village communities to access building materials through a possible subsidy voucher system to support them as they build their own houses. This will also improve the effectiveness of our people’s housing process,” said Sisulu.
She reiterated that her department was on track with its objectives and realised that the road was fraught with difficulties and challenges.
“However, we must acknowledge that the last four years saw marked improvements in housing developments in integrated human settlements. Our approach is correct and contributes to the improvement of living conditions of our bene- ficiaries. Challenges, however, remain but we will steadfastly confront them as we contribute to the creation of a nonracial, nonsexist and socioeconomically integrated society.”
