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EDITORIAL: Valley housing costs low relative to rest of nation

Most Americans dream of owning a home. Many, however, find it difficult to do so and some will never have the income to make that dream a reality.

Fortunately, that dream can be more easily realized in the Rio Grande Valley than in most other U.S. cities.

HomeArea.com, an online housing market resource for consumers and researchers, reports that Pharr has the most affordable housing in Texas among cities with 60,000 or more residents. Edinburg ranks third and Mission sixth.

Other Valley cities fared well also, with Harlingen placing 12th, Brownsville 16th and McAllen 34th.

The rankings used the Median Multiple, which the website says is the World Bank’s recommended metric for determining housing affordability: the ratio between an area’s median home price and the median household income. The numbers don’t necessarily mean housing costs are the lowest; a city with higher home prices might still be considered affordable if incomes in the area also are high.

For example, Pharr’s median home price is about $71,000, a little more than double the mean income of $32,000. Edinburg’s $98,200 median home price compares with its $42,000 median income.

HomeArea also lists cities with the cheapest overall housing costs, and Valley cities fare well in that category as well.

That list computes major costs associated with owning a house, regardless of income: mortgage payments, real estate taxes, insurance, utilities and condominium fees, as well as rent and utilities for renters. On that scale, Pharr ranked third in the nation with Harlingen fifth, Mission 10th and Brownsville 12th.

According to the Bureau of Labor Statistics, housing usually is the largest expense families endure, costing about a third of their annual salary. By comparison, food expense is roughly 13 percent. Thus, affordable housing often is a major consideration when people are thinking about making a move.

Thus, the latter metric might be more important for such considerations, since it better reflects community conditions. For example, lower utilities can mean a more agreeable climate as well as efficient supplies of electricity, water and wastewater services. Insurance is affected by low crime rates such as those found in the Valley.

Perhaps most notably, with our state’s reliance on property taxes to fund so many public services, those numbers can reflect the efforts of local city, county and school boards to be frugal in their budgeting and keeping property taxes as low as possible.

The Valley housing market benefits from available land and low construction costs. But other factors that affect the cost of living, such as favorable insurance, utility and tax rates, are a testament to residents and officials who look for ways to keep the manageable costs down. They might not often receive thanks for their efforts, but that gratitude is deserved.

Source: Themonitor

Affordable Housing Requires a New Shape for Mortgage Industry

There are two essential parts to achieving affordable housing: building decent, low-cost homes, and developing a housing finance market that enables low-income earners to buy those homes. For, without finance, almost no home price is low enough to be affordable on an average salary.

For this reason, the mortgage market has been growing. Housing loans have risen more than ten-fold since 2006, from 1,278 loans valued at Sh19m 12 years ago to 24,458 loans valued at Sh203.3bn by 2015, according to the Central Bank of Kenya (CBK).

But the market still remains tiny when compared with other nations. In Tanzania and Uganda, the mortgage loan value is under 2.5 per cent GDP while in Kenya stands at 3.15 per cent of GDP by 2015. In South Africa, it contributed some 32 per cent of GDP.

Yet in countries where mortgages drive a large flow of home buying, home owners prime the pumps of the economy with additional spending power in an inflow that makes for faster economic growth.

However, our own mortgage market is held back by multiple constraints, including bureaucracy. Normally, the purchase of a property takes around three months to complete. For instance, mortgage finance in Kenya typically takes six months to arrange, mired in nine separate, manual, administrative processes.

These span land rent and rates clearance certificates, transfer filing and consent, the search, the valuation and its endorsement, and the stamp duty and lodging of documents. This process, which the government is now working to simplify, adds cumbersome work, as well as risk, thus increasing the cost of mortgages.

Most primary mortgage lenders in the region thus set higher mortgage rates and focus on high net worth individuals and high earners who can afford higher rates. They also run shorter repayment periods, ranging from as low as three years to an average of eight years.

But repaying at such high rates, so rapidly, puts borrowers under considerable pressure and leads to defaults, which today stand at some 12 per cent of Kenyan mortgages. It is additionally a model that offers very few opportunities for low and middle-income Kenyans to own homes.

We, thus, need a radical overhaul of mortgage financing if we are to achieve widespread home ownership, which is where mortgage refinancing comes in.

Providing a source of secure, long-term funding for mortgages has a direct impact on the affordability of home loans for home buyers and is a vital pillar to achieving a developed mortgage system. Such funding was critical, for instance, in Malaysia and Singapore, where about 80 per cent of houses are now mortgage-owned.

For this reason, the Kenyan National Treasury is contributing to the Affordable Housing Pillar of the BIG 4 Agenda by supporting the creation of a lending facility (the Kenya Mortgage Refinance Company) to provide longer-term funds for banks and SACCOs for residential mortgages in Kenya.

The Kenya Mortgage Refinance Company (KMRC) will provide secure funding to mortgage lenders so that they can offer more mortgages at lower prices. With such long-term funding, primary mortgage lenders will also be able to lengthen repayment periods to 15 to 25 years, and offer a fixed interest rate, making mortgages both safe and affordable for low income earners.

The new financing will mainly be available for lower cost housing, valued at less than Sh4m in Nairobi metropolitan area (Nairobi, Machakos, Kiambu and Kajiado) and Sh3m elsewhere. Likewise, to qualify for the housing loan, Kenyans must be earning less than Sh150,000 a month.

Refinancing the financial institutions will also enable them to expand their lending scope to finance developers as well, a strategy that can also be borrowed by other East African countries in meeting their affordable housing agendas.

The Government Affordable Housing project seeks to develop 500,000 houses in five years, which presents the largest real estate opportunity for a long time. But with the country having only managed to produce about 50,000 units over the last two to three years, achieving the targeted 100,000 houses a year will require considerable investment in construction.

The financing structures necessary to achieve this will be outlined in forums at the April 10th -11th East African Property Investment Summit, which aims to support the Government Affordable Housing Project. But as government and industry leaders convene to discuss the delivery of the targeted affordable housing, mortgage refinancing will be taking center stage as a crucial enabler.

Source: Johnstone Oltetia is the Interim CEO of Kenya Mortgage Refinance Company (KMRC)

Americans can’t afford a home in 70 percent of the country

  • Homes are actually a bit more affordable today than a year ago, and experts are watching to see if that will continue in 2019 
  • Still, in more than 70 percent of the country, home prices are more than the average worker can afford
  • Brooklyn and Manhattan took the largest share of income to buy a home — 115 percent 

Even with rising wages and falling mortgage rates, Americans can’t afford a home in more than 70 percent of the country. Out of 473 U.S. counties analyzed in a report, 335 listed median home prices more than what average wage earners could afford, according to a report from ATTOM Data Solutions. Among them are the counties that include Los Angeles and San Diego in California, as well as Miami-Dade County in Florida and Maricopa County in Arizona.

New York City claimed the largest share of a person’s income to purchase a home, according to the report. While average earners nationwide need to spend only about one-third of their income on a home, residents in Brooklyn and Manhattan must shell out more than 115 percent of their income. In San Francisco, residents must spend 103 percent, and in Hawaii’s Maui County, it takes 101 percent. Homes were found to be affordable in Chicago, Cleveland, Houston, Detroit and Philadelphia.

Edging toward a buyer’s market

Broadly speaking, homes are more affordable today than they were one year ago. While home prices are still rising in many areas, they’re also falling in others. Unaffordability in the market has been the result of slower homebuilding and homeowners staying put longer. Both trends have reduced the supply of homes for sale in the market.

So long as interest rates don’t go up and the impact from last year’s tax cuts don’t wholly fade away, the market may yet create better conditions for buyers. “Affordability may improve because of the simple fact that homes are out of reach for so many home seekers,” Todd Teta, chief product officer at ATTOM Data Solutions, said in a statement.

Lending standards are tighter

Today’s market is also more affordable than it was 10 years ago, before the housing crisis. Pre-Great Recession, home prices were higher or about the same, and income — even adjusted for inflation — was lower. But offsetting those conditions was rampant subprime mortgage lending, which allowed many people to buy homes they really couldn’t afford.

“What kept the market going was looser lending standards, so that was compensating for affordability issues,” Teta said. Lending standards have toughened since then, and the Federal Housing Administration in March has made it even more difficult for many Americans to own homes.

Source: .cbsnew

Affordable Housing: Tanzania to construct 30,000 affordable houses

The government of Tanzania is set to construct 30,000 affordable houses across the country as part of implementation of the election manifesto of the ruling party, Chama Cha Mapinduzi.

Minister for Lands, Housing and Human Settlements Development, William Lukuvi confirmed the reports and said the houses will be constructed by state-owned National Housing Corporation (NHC).

“The intention of the government is to provide affordable housing for its people. Construction of the houses will go in tandem with the improvement of infrastructure in the areas, including roads, schools and health centers,” said Lukuvi.

Shortage of affordable housing

Tanzania still suffers from a shortage of good quality and affordable housing. Current housing deficit is estimated at three million housing units valued at US $180bn coupled with a 200 000 unit annual demand with a projected combined cost of US $12bn.

The country’s mortgage market is among the smallest in East African region, despite it recording an annual growth rate in mortgage loan balances of six percent between March 2017 and March 2018.

According to a 2018 Cost of Living study by Numbeo, a Dar es Salaam residents pay the largest chunk of  their earnings about 31% on house rents than on any other basic commodity that is needed to survive. The study also states that at least 27.6% of an average Tanzanian’s earnings is spent on rent – leaving the remaining 72.4% for other basic needs.

Source: Constructionreviewonline

California County Changes Recession-Era Affordable Housing Policy

Peoples’ Self-Help Housing, a nonprofit affordable housing developer working in California’s Central Coast, doesn’t always find itself allied with the San Luis Obispo Chamber of Commerce. But with the state’s housing crisis being what it is, advocacy groups that aren’t used to working together are increasingly finding themselves pushing in the same direction.

Earlier this month, the San Luis Obispo Tribune reported, the Board of Supervisors in San Luis Obispo County voted to amend its inclusionary housing policy to squeeze more funding for affordable housing production out of market-rate development. Thanks to the revision, multifamily developments will need to set aside 8 percent of their units at affordable rates for various income levels.

That part of the new plan is similar to what’s been in place for several years, and it’s not likely to produce a great many new affordable units on its own. Airlin Singewald, a county senior planner, says that only one project has actually incorporated affordable units in the decade or so that an inclusionary housing policy has been on the books. Going forward, developers that don’t incorporate affordable units will be required to pay an in-lieu fee on a new tiered structure.

This could increase the yearly revenue from that fee from less than $50,000 to more than $1 million, according to Singewald.

As far as inclusionary housing policies go, San Luis Obispo’s 8 percent requirement is fairly modest. But the update was a long time in the making. The county first adopted an inclusionary housing policy back in 2008, just as the housing market was crashing, with plans to phase it in over five years and to eventually raise the affordable unit requirement to 20 percent of the total in most new developments. But with the economy in recession, the Board of Supervisors slowed down on increases.

“It wasn’t until late 2016 that we could get to year two,” says Supervisor Bruce Gibson. “There just wasn’t the political will to do it.”

Post-recession, housing became more expensive and county staff hired a consultant in 2017 to recommend new fees for market-rate development in the area to generate more money for affordable housing. At the end of that year, for reasons that are still not entirely clear even to Gibson, the Board of Supervisors opted not to adopt those recommendations.

But advocates, including Peoples’ Self-Help Housing, the Chamber of Commerce, and the Home Builders Association of the Central Coast, a local building trades lobby, began working together to win more support for affordable housing in the county.

“It was that group that really helped us develop the political support necessary to reconsider this,” Gibson says.

Early last year, Gibson, a Democrat, reached out to fellow Supervisor John Peschong, a Republican, to talk about trying again. (Officially, county supervisor seats are nonpartisan.) In December, the board and the coalition of advocacy groups agreed on a deal. It was formalized with a 5-0 vote on March 12.

“In this community, I think that people realize the crisis affects us all, so we tend to work together,” says Kenneth Trigueiro, senior vice president at Peoples’ Self-Help Housing. “But I don’t remember this coalition coming together for any other purpose other than this one.”

The compromise policy isn’t a home run for all sides, nor necessarily for the prospect of solving the county’s housing shortage. Only developments of at least 2,200 square feet will be required to pay the in-lieu fee, which is between $8 and $16 per square foot, according to the Tribune. It’s conceivable that builders could simply design homes at 2,195 square feet to avoid the fee, Gibson acknowledges.

But he says it’s not likely that the county will see a lot of subdivisions, because most of the building taking place in unincorporated parts of the county are for large single-family homes. Supervisor John Peschong says it was his goal to raise the threshold for the in-lieu fee so that the county wouldn’t be making it more expensive to build smaller, and therefore usually more affordable, housing in the first place.

To Trigueiro, the plan is notable because it came from groups choosing to “set aside seeking a political victory for our own interests, and instead we each sought to win a common victory toward solving our community wide affordable housing crisis.”

And, as Gibson says, “In terms of the ability to actually put units on the ground, we go from generating less than $50,000 a year to potentially more than $1 million a year based on the five-year average of the size homes that have been built.”

The Board of Supervisors agreed to revisit the policy in three years and see how much it has accomplished. In the meantime, the board directed city staff to explore a range of alternative plans for raising new affordable housing funds. Those options include bond sales, creating a tax on second homes, and raising the local sales tax and transient occupancy tax, according to Singewald.

The planning staff is also working through a range of policy measures in a Housing Initiatives Package produced in 2016, which include encouraging more accessory dwelling units, tiny homes and housing tailored to agricultural workers. A Board of Supervisors hearing on some of those measures is expected in the fall.

More strident proposals that other cities are considering, like rent control, are probably a “non-starter” in San Luis Obispo County, says Gibson. For now, he says, the Board of Supervisors has taken “a first modest step in the direction of doing what government is able to do.”

“We talk about affordable housing and that has sort of a cold, bureaucratic ring to it,” Gibson says. “The thing that I’m most concerned about is how we house the next generation of community members in this county … . My motivation on this is really to try to strengthen our community by making it possible for these folks to set down roots and become engaged community members. And one of them, I hope, will take my job someday.”


Hong Kong housing ranked world‘s least affordable again

Hong Kong has been ranked the world‘s least-affordable housing market for a ninth straight year.

Not only did it retain the notorious title, homes in the city got further out of reach for most residents, according to Demographia, an urban planning policy consultancy. The city‘s median property price climbed to 20.9 times median household income in 2018, up from 19.4 times a year earlier.

Vancouver was ranked the second-most unaffordable market, leapfrogging Sydney – where the housing boom has gone into reverse. Melbourne came in fourth, followed by San Jose and Los Angeles. London was the worst European city, coming in equal 10th with Toronto.

The Demographia study covered 309 metropolitan markets across eight countries, including Australia, Canada, the UK and the US, as of the third quarter of 2018. Twenty-nine major housing markets were classed as “severely unaffordable.”

Things may get easier for homebuyers, however as property markets from Hong Kong to London join a global downturn. Hong Kong housing values have endured their longest losing streak since 2008, prices in outer London neighbourhoods have fallen for the first time since 2011 and Sydney home owners are grappling with the worst real estate slump since the 1980s. In Manhattan, the median condo price dipped below $1m for the first time in three years.

In the years since the financial crisis, global cities like London, Hong Kong and New York appeared to defy housing-market cycles, thanks to a concentration of financial jobs and the self-fulfilling belief that they offered investors a safe haven. Now every release of data seems to turn those assumptions on their head.

Luxury residential prices are growing at the slowest rate since 2012, according to a Knight Frank index of prime properties in 43 cities. Where some see an orderly retreat, others see cause for concern. A November working paper by the International Monetary Fund (IMF), warned that the tendency of housing prices in global cities to move in sync means that local shocks could upend markets around the world.

There are a few global cities that affect “the sentiment about risk perception,” said Albert Saiz, a professor of urban economics and real estate at the Massachusetts Institute of Technology (MIT). “If New York and London are catching a cold, the primacy is large enough that they might have an impact on the overall market.”

International investors in search of higher-yielding investments have poured cash into the biggest, most-expensive housing markets, pushing prices ever upward. Governments became concerned the gains were unsustainable, and reacted with measures aimed at curbing the flows of international money.

UK lawmakers will publish details later this month of a tax on foreign real estate buyers in London. That plan follows moves to increase charges on second homes and properties owned by corporate entities. The government also eliminated tax breaks for rental homes bought with mortgages. Home prices in the most expensive parts of London are down 19pc from their peak in 2014, according to data from Savills Plc, but the move to curtail investor purchases is still on.

Similar dynamics are playing out around the world. The number of home sales in Vancouver dropped 32pc in 2018 from the previous year, following a series of new taxes, stricter mortgage rules and rising interest rates. Median prices in Auckland registered their first annual drop since 2008 after the New Zealand government passed legislation to restrict foreign buying that it said was partly to blame for escalating housing costs. Home prices have dropped 11pc in Sydney from their 2017 peak after government restrictions on foreign purchases and tighter credit.


“Government actions to reduce foreign purchases and/or stretched borrower affordability have already caused home prices to stall or fall in cities such as Sydney, Melbourne, Toronto, Vancouver and Stockholm,” Fitch Ratings said in a report issued on January 15 last on global home-price growth.

In Hong Kong, a looming vacancy tax, intended to dissuade investors from hoarding empty apartments, played a part in driving prices down almost 9pc from their August peak.

Citigroup Inc. said it expects prices to reach their nadir in March – and there‘s ample evidence to suggest homebuilders remain concerned. China Overseas Land & Investment Ltd recently unveiled aggressive discounts at its new residential units released in Hong Kong‘s Tai Po area in an effort to fend off competition amid rising supply.

Policies aimed at reining in prices aren‘t the only factors weighing on growth. Local dynamics, like Britain‘s planned exit from the European Union, last year‘s US tax bill, or tighter capital controls in China are no longer local – they ripple around the world.

In the US, developers that focussed on affluent buyers came out of the Great Recession with comparatively strong credit, said Daryl Fairweather, chief economist at Redfin Corp. The result has been a glut of million-dollar condos accumulating in major markets, while scarce supply drove prices higher on more-modest homes. Now US markets are softening as buyers blink at high prices and rising interest rates and volatile equity markets exacerbate affordability concerns.

“For a long time, you could talk about big, important issues like Brexit or tax policy change in the US – each one of them seemed to hit a major market but didn’t really cross over,” said Dan Conn, chief executive officer of Christie‘s International Real Estate. “What happened this year is that the trade battles started to make this, instead of a regional conversation, much more of a global conversation. People are talking about global impacts.”

Source: Bloomberg

FHF partners 14 states and others to provide affordable housing

Prepared to tackle housing deficit head-on, the Managing Director of Family Homes Fund (FHF) Limited, Mr. Femi Adewole, said the fund has initiated working relationship with 14 state governments, over 20 developers, four commercial banks and three mortgage banks to enhance home ownership among Nigerians.

Speaking with New Telegraph in Lagos, Adewole said the Fund expected at least 5,000 housing units across five states in the first phase.

He added that more state governments have reached out to the company and that more projects were expected to take off before the end of first quarter of 2019, resulting in additional 6,000 homes across all regions in the country.

The Fund targets 500,000 new homes for Nigerians in five years. Adewole also said that the Fund had concluded arrangement to launch a financing system that would assist low-income group to access finance/mortgages with ease and in a shorter time for home ownership.

On how to ensure that low-income earners have access to housing units, he said: “We are very conscious of the difficulty faced by the low-income group in accessing finance for home purchasing. Consequently, he said FHF will soon launch a financing system that will assist them to access mortgages with ease and in a shorter time.

“We also have a series of checks between all partners in the system, which are conducted on buyers to ensure that they are in the low-income group,” he said.

“Buyers are also required to sign an undertaking to show that they are first-time home buyers, which will be verified before purchase.” In ensuring that buyers get access to financing, the FHF boss said banks need to give competitive interest rates to ensure that low-income group is not side-lined.

The Family Homes Fund Limited is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority (NSIA) as founding shareholders with aim to address the country’s housing deficit.

The Fund is structured as a Real Estate Investment Trust and is being professionally managed to catalyse funds from the private sector, pension funds, insurance funds, multilateral agencies and impact investors. In 2018, he disclosed that housing units were completed in Luvu-Madaki, Masaka, Nasarawa State, through FHF.

On challenges facing the Fund, Adewole stated that one of the challenges was to ensure that homes being delivered are affordable.

He said: “This implies that our costs should be competitive, and the major cost component is land. This highlights the importance of our partnerships with the state governments.

When the state governments give us land, the total cost of production is reduced by a great degree.” Another challenge, he said was about getting developers to key into the vision of affordable housing and it delivery as scheduled.

“We have been fortunate so far to work with developers who understand this and are committed towards growth in the affordable housing space. We also assign independent project managers who ensure these projects are delivered in good time and are of good quality,” the FHF boss said.

On high cost of building materials, Adewole said he would work with developers who have a huge capacity to develop higher quantum of housing units, so that they could work with economies of scale, thereby reducing material cost per unit. Besides, Adewole said the Fund has developed a working relationship with manufacturers focused on long term, which would enable developers purchase materials at cost-effective rates.

“This is also in line with our focus on local content; which ensures we work with local materials that we can obtain at fair rates,” he said. Family Homes Fund is the largest affordable housing focused fund in Sub-Saharan Africa, leveraging on significant capital (in excess of N1 trillion by 2023) to facilitate access to affordable housing for millions of Nigerians on the low to medium income bracket.

Source: Dayo Ayoyemi

London Landlords Are Paid £14m To House Homeless People

Cash-strapped London councils are shelling out more than £14m a year to private landlords in “incentives” designed to house the homeless, it has been revealed.

Last year private landlords were paid sweeteners of up to £8,300 each more than 5,700 times in a bid to encourage them to house people who were either homeless or at risk of being homeless, according to an investigation by The Guardian.

Landlords say the compensations are meant to counteract the fact that tenants of this kind are more likely to fall behind on rent. But some landlords also criticised the system, admitting it could be a “waste of money” given that such tenants are more likely to be evicted later on.

The system has been widely criticised. “The payouts are made in addition to rent and have been branded as ludicrous by housing campaigners and intolerable by councils,” says the newspaper.

The justification for such payouts is given as the drop in social housing being built as well as a widening gap between housing benefit and market rents.

Ealing, Hillingdon, Haringey and Barking and Dagenham all paid out more than £1m each last year. Barking, Dagenham and Ealing argue that this costs less money in the long-run than funding the building of social housing.

But Polly Neate, chief executive of the Shelter housing charity, says: “It is ludicrous councils have to resort to handing out cash sweeteners to secure housing for desperate families when there’s a much more sustainable solution: build social housing on an ambitious scale.”

Shelter is currently calling for £3.1m to be spent on a national social housing programme.

While the majority of London’s boroughs paid landlords these incentives to some extent last year, only five completed social housing builds.

The system operates nationwide but research from the homelessness charity Crisis shows that 25% of the UK’s homeless population are in London. Since 2010, homelessness in England has risen by 169%. Funding from central government has dropped by 63%.

In response to this issue, London councils are collaborating to secure housing within London. The not-for-profit Capital Letters will procure housing on behalf of the boroughs with £37.8m in funding from the Ministry of Housing over the course of three years. The system sets out to eliminate competition for housing between boroughs.

Source: IndependentNg

Radical new housing deal proposed to break apartheid barriers

While over half a million Capetonians live in informal settlements, the Rondebosch Golf Club pays the City of Cape Town only R1 000 a month for the use of 450 000 square metres of well-situated land.

With a full membership costing R15 750 a year, and fees of about R150 to play a round in off-peak times, the golf course is inaccessible to the vast majority of residents, including those who live around it.

The golf club’s lease with the city is contained in a new report on city-owned land by civil society organisation Ndifuna Ukwazi, which also states that some of the best land in the city “is being used as a dog play park” for the @Frits Pet Hotel and Daycare Centre, described as the largest of its kind in the world.

The report, City Leases: Cape Town’s Failure to Redistribute Land, proposes a “radical new deal” for housing on 24 areas of city-owned land, including golf courses, bowling greens, country clubs, and parking lots. These range across the breadth of the city, from Camps Bay to Strand to Fish Hoek.

Detailed proposals are provided for five of the areas:

Rondebosch Golf Club
Buitengracht corridor
Harrington Square (parking lot)
Green Point Bowling Green
Fish Hoek Bowling Green.

The Rondebosch golf course is the largest area. Two-thirds of the golf course is above the 100-year floodline, and Ndifuna Ukwazi calculates the land could offer 183 360 square metres of built space for a mainly residential development that includes communal space, offices, shops, schools, and social amenities.

Depending on the mix of social and market-related housing, about 2 500 residential units could be built there, says the report. These would include single stands and mid- to high-density apartment blocks as a mixture of market-related, social and GAP homes (GAP housing is subsidised by the state for people earning R3 500 to R15 000 per month), set in green space along the Black River.

Three scenarios

The authors – Nick Budlender, Julian Sendin and Jared Rossouw – calculated scenarios for Rondebosch golf course in which residential units are built according to a 40% market-related and 60% social housing split (including 20% for GAP housing); a 50-50 split between market and social housing; and a 60-40 split.

The square meterage of individual units in the calculations ranges from 50m² for a market bachelor flat and 30m² bachelor for social housing, while a two-bedroom flat built for the market would be 70m² and one built for social housing would be 45m², which is the average size of an RDP house.

There could also be 116 free-standing homes on 400m² each, and 454 two-bedroom GAP houses of 55m², all set within public and semi-private green space with a promenade along the Black River providing direct pedestrian access to Mowbray.

The 30 separate blocks could each be owned through sectional title schemes and, ideally, would each contain a mix of social and market housing rather than economic differences being divided into separate blocks.

Similar modelling is done for the Harrington Square parking lot, the seven parcels of land which are mostly used as parking lots on lower Buitengracht Street, and for the Green Point Bowling Green, which the report states deputy mayor Ian Neilson has publicly committed for social housing.

For Fish Hoek, which has a density of 884 people per km² while nearby Masiphumelele bursts with a density of more than 40 000 people per km² (2011 data), the proposal is for 171 units built as three-storey walk-ups all dedicated to social housing.

Produced for GroundUp by West Cape News.

Source: MoneyWeb

Why joint ventures are critical for affordable housing

Millions of Kenyans eager for a break from the threat of a life-long rent burden have a reason to be optimistic following the inclusion of affordable housing as one of the governments 4 priorities.

The right to a decent housing by all Kenyans is a constitutional obligation. The 2010 Constitution of Kenya identifies access to adequate housing and to reasonable standards of sanitation as an economic and social right.

President Uhuru Kenyatta’s affordable housing programme seeks to ensure that 1 million Kenyan families become homeowners by 2020. There is already a backlog of two million houses countrywide and that deficit continues to grow by 150,000 units every year.

Annual construction remains a mere 50,000 units against a targeted provision of 250,000 units. Housing costs have risen dramatically due to the exorbitant cost of land, construction materials and labour.

As urban populations increase rapidly, developers continue to target the few upper-middle and high-income families because large housing units generate more profit. Lack of available land for affordable housing has also exacerbated the crisis.

Due to the shortage of affordable housing, many people are forced to live in poor conditions in informal units while overcrowding has led to the degradation of utilities and services including sanitation, water and roads.

The affordable housing plan is therefore timely and necessary. Affordable housing is a complex matter and to increase the chances of success, it is important to draw lessons from the successes and failures of the numerous projects around the globe.

Similar projects that achieved a measure of success adopted joint approaches to financing, regulatory reform, incentives and the use of innovative planning and construction techniques.

Inadequate financing remains the key challenge to housing projects because housing is a capital-intensive sector. The Central Bank of Kenya reported that mortgage uptake has been on the decline with only 28,000 mortgages taken up in 2018.

Kenya Mortgage Refinance Company

The drop was mostly due to high interest rates, tight credit standards and liquidity issues including the long-term 18-month mortgage interest rates.

Establishment of the proposed Kenya Mortgage Refinance Company (KMRC) is anticipated to bridge the financing gap. KMRC will operate as a private sector driven company and provide secure long-term funding to mortgage lenders.

With joint shareholding, the government, pension and insurance firms, banks and venture capitalists can increase the affordability and availability of mortgage loans.

Pension firms for example can upscale the use of pension savings as collateral to provide members with low-interest loans against their retirement savings while at the same time increasing the share value of their social security savings.

It is critical for the government, through national and county government grants, to enroll multiple external financiers who can provide credit rates as low as 5-6 percent.

Private sector players will be able to draw the funds and offer developers and prospective home-owners longer-term mortgages at lower interest rates.

The writer is Group managing director of CPF Group.

Source: BusinessDailyAfrica

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