Social contract for (not so) rapid housing delivery
More on last week’s Department of Housing’s “pre-plenary” session regarding its social contract for rapid housing delivery.
The Social Contract was signed by over forty delegates and housing sector representatives attending a 3-day symposium in
A lot of wheels are spinning. There have been many meetings, at which a variety of government, private sector and civil society representatives have been present. People have flown from different parts of the country to convene in
An overview of the six task teams, which together address (1) finance and economics; (2) land matters & legal; (3) product & delivery; (4) development planning; (5) supply chain; and (6) consumer education, capacity building and communication; suggests that the vast range of issues are being addressed.
But after spending the day listening to their various presentations, and in the context of the time that has elapsed since the social contract was signed in the first place (12 months), I found it a challenge to be optimistic. I can’t see anything rapid at all. No concrete proposals were presented – only proposals for proposals, behind which a lot of work still needs to be done. Most of what was reported has already been very clearly documented in the very good research undertaken by the Banking Association on Housing Supply and Functioning Markets – if anyone would care to read that (albeit lengthy) report. I found myself wondering if the consultative style that has been such a success for
An interesting article in the weekend papers highlights some astonishing, depressing facts (many of which I’ve raised previously in these posts):
§ Only 19 000 houses are being built in the sub-R200 000 category – that is ‘affordable’ stock which a household earning between R1500 – R7500 per month could buy with Financial Sector Charter mortgage finance. This is versus the estimated 132 000 such houses required annually to address the backlog in this segment of the market.
§ According to Statistics SA, building plans for only 18 668 houses of less than 80m² were passed in the first six months of this year. This is a 9.9% drop from those passed in the same period last year.
§ The number of houses completed in this category dropped by 16.4% from last year’s 6-month figures, to 10 496 in the first six months of this year.
§ Proclaiming land and establishing new housing stands takes 30-59 months when it used to only take 12-18 months. Building houses on these stands and transferring them to residents, now takes 19 months versus the five it used to take.
§ Meanwhile, land is becoming too expensive for the FSC target market. Absa’s house price index reports that a stand that cost R46 000 in 2003 went up to an average R93 000 in June this year.
§ Building material costs are also rising more rapidly than inflation: cement prices have increased by 7.2%, timber by 12.5%, aggregate crushed stone by 9.5% and basic forms of aluminium by 29.6%. Mittal Steel SA has raised steel prices by 12% (4 and then 8%) this year.
In my mind, a “social contract for rapid housing delivery” should be about improving these statistics – not seeing them become more dire.
At the same time, the article reports that government’s planned housing expenditure is to double from R4,2 billion in 2003 to R9,5 billion in the 2008/09 financial year. This raises many questions about government’s focus: Surely this is a level of purchasing power that the Department of Housing could use to engage with the suppliers of housing and housing materials to reduce costs at least to inflation? If bulk buying works in other circumstances, why can the Department of Housing’s budget not be used to mobilise bulk buying conditions for the country’s housing programme? And why are they wasting their time talking rather than actually engaging in the problems identified a year ago, and fixing them?
The problems facing housing delivery in
