Hidden economic benefits of affordable housing
Development Bank of Namibia (DBN) CEO Martin Inkumbi sheds light on the overlooked benefits of affordable housing
Speaking at the unveiling of 324 residential erven, five commercial and five institutional erven that will make up Orwetoveni Extension 12 in Otjiwarongo, Development Bank of Namibia (CEO) Martin Inkumbi highlighted often overlooked macro-economic benefits that support the case for acceleration of delivery of serviced land and affordable housing.
Chief among the benefits, he stated, is the empowerment of people who cannot afford a decent house of their own. Owning a house and building an asset base is empowering to families, as they get the opportunity to lock into a property as opposed to being exposed to ever increasing rentals.
Secondly, but equally important are development and economic impacts stemming from income gains to owners of affordable housing. By shifting a portion of income away from monthly rental payments or bond repayments, income which has a beneficial effect is released into circulation in the economy.
Inkumbi said that this income can be used to support families, as disposable income or for individual savings. Whichever way the income is used, it will become available in the economy, creating better conditions for economic activity and growth.
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, this would add to the revenue of a retail outlet, and support jobs in the outlet. If the holder of the resource chose to spend it on private education, this would also support capacity building and ultimately jobs. If the holder chose to 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 unit of housing, Inkumbi sketched out a dispersal effect in which a spread of income sources would enhance diversity of the economy. He illustrated this by saying the owner of a single, costly unit might use 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 the need for affordable housing crosses all of Namibia’s regions.
On the topic of job creation for the construction industry, Inkumbi said that mass housing would require incrementally more staff to work across multiple units, and that even on a temporary basis, this would have a beneficial effect for 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, however this would not necessarily be a bad thing. He explained that where the industries previously relied on revenue from a limited number of expensive units, it could achieve greater returns from construction of larger numbers of affordable units.
He justified this by pointing to the current drag on housing prices in expensive brackets, saying that particularly the real estate industry would find new sources of revenue in larger numbers, and strengthen themselves with 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 is 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 went on to invite developers particular those with a focus on low income houses and the rent-to-buy market to approach the Bank and find out how to apply for finance or find out how to structure proposals with a view to initiating projects. The Bank, he said has a strong track record in the field, with N$796 million approved for affordable housing projects and N$580 million approved for land servicing.
Property developers, Inkumbi concluded, will find that the Development Bank’s doors are open for business and our minds are open to proposals.