The CEO of FNB Housing Finance, Marius Marais in Johannesburg has recently made a statement that the affordable housing sector is in high demand with an average of a mere 20 000 units developed annually compared to an estimated one million homes needed.
These assertions to not include future demands of affordable homes for a growing GDP. According to Marias, affordable housing constitutes households that earn between R3 500 and R25 000 per month.
Out of the entire home loan market, affordable housing constitutes 32%, which results in quality homes ranging up to R600 000. Using data collected from the most recent Census, FNB is able to assess the affordable home loan market that includes an estimates 4.5 million households.
However, there is still an outstanding demand for a million new homes. FNB recognises the demand for new innovative financial products to account for this market as traditional higher income mortgage loan financial products do not cater for them. Marias stresses the importance of constructing new housing units at applicable market prices. He said that 96% of the market for FNB’s House Finance department are first-time homeowners.
These first-time homeowners are often influenced by issues such as affordability, interest rate increase, pressure from inflation, and unemployment. However, FNB has made inroads into this affordable housing shortage seeing as the default rate for this market is more stable than that of the traditional higher income segment.
Over the next two years, the company plans to finance 6 000 new housing units valued at R2bn. FNB has approved forty developments, from which a total of 12 000 units will arise.
For more information about FNB’s mortgage rates and other financial services, refer to our Money section.
©Diane Moalem for Compare Guru