Low Income Access to Housing Finance

A fundamental goal of South Africa's housing policy is to enhance access to housing finance for low-income earners. Housing finance continues to be seen as a critical component of the government's overall housing policy in that it offers the opportunity for individual households to actively participate in improving their own housing circumstances rather than relying solely on government provision. Further, it assists families in realising the asset value of their houses – a critical intention of government's current housing approach.

While the 1994 housing policy set up an array of measures and institutions to facilitate increased access to bank and non-bank housing finance, very little research has considered the actual impact that these efforts have had. In 2004, a decade on, is it possible to say that they have been successful? Has access to housing finance broadened and deepened?

This report explores consumers' perceptions regarding these questions, using the FinScope survey1 and other relevant survey data. The data highlighted in this report is especially relevant in the light of the recently announced Memorandum of Understanding ('MoU') between the Minister of Housing and the CEOs of the big four retail banks. The report tests some of the underlying assumptions about the impact of home ownership on wealth creation, given the distorted context of the housing market in South Africa and the often unanticipated stresses home ownership can place on household budgets. It also uses survey and industry data to identify current sources of housing finance including subsidies, loans and savings. Finally, the document includes a number of key challenges that may impact on the success of the Financial Sector Charter ("FSC") commitments in enhancing access to housing finance for the poor.