Affordable housing may stimulate economic growth

Posted by The Namibian on 07 Mar 19


Real Estate Market Finance & Budget
Post list 1

The Development Bank of Namibia's chief executive officer, Martin Inkumbi, says once Namibians are able to acquire affordable housing, they may be able to contribute to economic activity in the country.

Speaking at the unveiling of 324 residential erven, as well as five commercial and five institutional erven that will make up Orwetoveni Extension 12 at Otjiwarongo, he highlighted the often-overlooked macro-economic benefits that support the case for the acceleration of the delivery of serviced land and affordable housing.

Chief among the benefits, Inkumbi 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 developmental and economic impacts stemming from income gains to owners of affordable housing. By shifting a portion of income away from monthly rental payments, income that has a beneficial effect is released into circulation in the economy, he added.

Inkumbi said this income could 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, it 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 a dispersal effect in which a spread of income sources would enhance the diversity of the economy. This could be displayed if the owner of a single, costly unit uses 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.

ERVEN UNVEILING …The Development Bank of Namibia (DBN)'s chief executive officer Martin Inkumbi launched serviced land at Orwetoveni Extension 12 at Otjiwarongo, saying savings on rental and payment for expensive homes will stimulate economic activity without causing harm to property developers and real estate agents. From left: GIPF general manager for investments Conville Britz, DBN chief executive officer Martin Inkumbi and the DBN's senior portfolio manager, Helen Amupolo.

On the topic of job creation for the construction industry, the chief executive said 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 on the economy.

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

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

He further invited developers, particularly 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 noted, 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.