DBN pushes affordable homes

The bank has a strong track record in the field, with N$796 million approved for affordable housing projects and N$580 million for land servicing.

11 March 2019 | Infrastructure

Fast-tracking residential land delivery and affordable housing will not only empower cash-strapped low-income earners and ensure them a stake in the local economy, but lead to a myriad of economic benefits for the whole country.

At the unveiling of 324 serviced residential erven, in addition to five commercial and five institutional erven at Extension 12 in Otjiwarongo's low-income Orwetoveni suburb last week, Development Bank of Namibia (CEO) Martin Inkumbi highlighted the often overlooked macro-economic benefits that support the case for the acceleration of the delivery of serviced land and affordable housing by local authorities.

The bank, he said, had a strong track record in the field, with N$796 million approved for affordable housing projects and N$580 million for land servicing.

Chief among the benefits, he said, was the empowerment of people who could not afford a decent house of their own. Owning a house and building an asset base was empowering to families, as it gave them the opportunity to lock into a property as opposed to being exposed to ever-increasing rent.

Inkumbi added that an equally important knock-on impact was the development and economic benefits stemming from income gains to owners of affordable housing.

He explained that by shifting a portion of income away from monthly rent payments or bond repayments, money was released into circulation in the economy.

Inkumbi said this income could be used to support families, as disposable income or for individual savings. Whichever way the income was used, it would become available in the economy, creating better conditions for economic activity and growth, Inkumbi stressed.



Money spent

He illustrated this by examining how the additional household income might be used.

If the holder of the amount saved purchased a fridge or a stove, that would add to the revenue of a retail outlet and support jobs in the outlet.

Alternatively, if the holder of the resource chose to spend it on private education, this would also support capacity building and ultimately jobs.

Moreover, if an individual chose to instead repay the bond faster or save the amount, this would also make the cash available to the economy, through investments made by banks.

Although it can be said that the same would be true for a single, more expensive housing unit, Inkumbi sketched out a dispersal effect in which a spread of income sources would enhance the diversity of the economy.

He illustrated this by saying the owner of a single, costly unit might use their disposable income on an expensive vehicle, supporting revenue and jobs in one outlet, but multiple beneficiaries of affordable income would have different needs and support multiple, different enterprises to support their needs.

The dispersal effect would not only support multiple enterprises but could also have a significant geographic impact, as affordable housing was needed in all of Namibia's regions.



Jobs

On the topic of job creation for the construction industry, Inkumbi said that servicing land and building affordable homes would require incrementally more staff to work across multiple units, and that even on a temporary basis, this would have a beneficial effect on the economy.

Inkumbi acknowledged that the mass nature of affordable housing would have an impact on the nature of the property development and real estate industries, but that would not necessarily be a bad thing.

He explained that where the industries previously relied on revenue from a limited number of expensive units, they could achieve greater returns from the construction of a larger numbers of affordable units.

He justified this by pointing to the current drag on house prices in expensive brackets, saying that particularly the real estate industry would find new sources of revenue in larger numbers, and strengthen itself with a greater diversity of price offerings to a wider market, rather than competing for a shrinking number of buyers with deep pockets in the market for expensive homes.

He pointed out that the structural adjustment to the industry was a fait accompli, as evidenced by the growing number of property developers and real estate agents initiating projects in the serviced land and affordable homes bracket.

Inkumbi invited developers, particularly those focusing on low-cost housing and the rent-to-buy market, to approach the bank and find out how to apply for finance or how to structure proposals with a view to initiating projects.

JANA-MARI SMITH

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