Two weeks ago, I participated in the public hearings into housing finance, convened by the Financial and Fiscal Commission in South Africa. As background: the FFC is “an independent, objective, impartial and unbiased constitutional advisory institution… [with] the responsibility to advise and make recommendations to Parliament, provincial legislatures, organised local government and other organs of State of financial and fiscal matters” in South Africa. The primary role of the FFC is “to ensure the creation and maintenance of an effective, equitable and sustainable system of intergovernmental fiscal relations in South Africa”.
This is the first time the FFC has entered the housing debate in this way, inviting public, private and civil society stakeholders from across the housing finance sector in South Africa to present their views on the state of our housing finance system. The FFC has published all of these presentations on its website (scroll half-way down the screen), providing an excellent resource of what, I think is safe to say, is the collective view of the challenges facing South Africa’s housing sector today. When you review these, pay special attention to the presentations by National Treasury, Shisaka, Urban LandMark, and Basil Read. The Shisaka presentation provides useful insight into what the National Department of Human Settlements is currently thinking – it being a report on a project that Shisaka has recently completed for the Department.
The overall consensus of all present at the hearings, from public and private sectors alike, was that housing finance policy in South Africa has reached a crossroads and that change is imminent. Many quoted the Human Settlements Minister’s frequent comments that the subsidy scheme must have a deadline and that houses cannot be forever given away for free. Two especially interesting comments: (1) the Banking Association of South Africa’s representative Pierre Venter said that he thought banks could consider reducing property specifications for underwriting mortgage loans targeted at the low income market, and specifically, that if all other distortions were dealt with, he could imagine banks agreeing to finance the equivalent of the house that the national subsidy programme currently gives away for free. This is hugely significant, as it suggests that IF the housing subsidy scheme is changed, affordable housing could well move down the market to the standard and price of what is currently subsidised housing. (2) someone from the Department of Human Settlements asked, what would our world look like if we didn’t have the national housing subsidy scheme as it is currently structured? It feels as if there’s some room in which to explore new scenarios and promote new approaches.
The FFC has published a short, summary report of the hearings, and has promised to amend the problem statement to reflect the issues raised in the course of the two days. Then, next year, they’ve promised to host new hearings in potential responses to the problems raised. Certainly all present were extremely relieved to be given an opportunity to speak and share their viewpoints, and many came forward to present their perspectives in good faith. This is an incredibly important initiative that bears watching – indeed, we should all support the FFC to help it keep the momentum going.
I gave a summary presentation at the FFC hearings, available here.