HOUSE SENSE BEGINS AT HOME

30 August 2007

Hotel Catering School, Granger Bay

Cape Town

Let me thank you for having extended the invitation to my office to be present here with you today. What you have asked me to discuss with yourselves is, as you yourselves realize, a matter of some importance to the country. This, in any case, is how we, politicians, see the role of housing in our evolving democracy. Against considerations of existing need we see it as a guarantor of our societal stability and peace, a vital component of social cohesion. However, and perhaps more importantly, we also see it as a lynchpin to greater and equitable economic development - shared growth – we call it. It is an important part of creating the kind of society that has been denied us – a society that has a common identity molded around our communities and, around those things that make up our daily lives.

For most countries housing counts as a very important index of the health of the economy. Our country however seems to be a notable exception to this, where the value of property excludes property in the second economy. Thus, our belief that we have to change.

We have two distinct and unrelated property markets in our country. It is in our interest to create a link between these two for first, there is value in the second economy market which we ignore at our own peril. The estimate; for example, that the Township Residential Markets research provided us with in 2005 was that the value of R68.3 billion worth of property is not being realized in the secondary market. I am made to believe that the estimate now points to the figure of R600 billion, a figure not to be trifled with. Second, the primary market has to work and be functional for the secondary market to realize its full potential. We are doing ourselves a serious disservice when we do not realize this.

It is in this context that we must understand the emphasis government is placing on the creation of integrated communities through integrated human settlements. We want to create a normal society out of a society that presently is characterized by an overwhelming presence of abnormality standing alongside seeming normality. For us to want to end the abnormality is only logical. And in that regard we want to normalize our spatial patterns.

If, for example, you consider that as per the 2001 Census 50 percent of the population is under the age of 25 and only 10 percent is over the age of 55 then you would realize that we have a young and a growing population and that the present housing challenge will be with us for a while. It therefore only makes sense to normalize the housing market within the shortest possible time for us to cater for the growing demand. We cannot lose and our economy can only grow, because it has to grow. However, it will only do so if we create a seamless property market that will be beneficial to all.

In our mind there is no doubt that housing or home ownership is an important tool against poverty. Properly conceptualized, it has potential for wealth creation and accumulation. But importantly, as government we have since 1994 injected into housing more than R44.1 billion that delivered security of tenure and built 2.4 million houses. It would therefore be a catastrophic waste of this investment if we do not finally see a normalized housing market.

This is fundamentally the context within which we approach the normalization of our physical and living space. It is a context within which the definition of ‘dead equity’ needs to take place. For it asserts the logic which says that that which is static and moribund does not grow.

But we would start off this important discussion which, we hope will provide more insight into our belief that housing for the poor is not merely a means to shelter but is also of immense economic value, by focusing on the inclussionary housing policy. This is one of the key policy instruments that will end spatial segregationist patterns and thereby help create a single housing market. It will end the dysfunctionalities and inefficiencies of our urban system and make planning more responsive to what we envisage for the urban environment.

We believe that inclussionary housing is an important step towards clearing ‘dead equity’. At the next session therefore we would be able to properly locate the debate on ‘dead equity’ and the relevance of the partnerships we have built to tackle that challenge. For this will allow the creation of spatial patterns of settlements that speak to us as a nation whose values are grounded in non-racialism and economic logic.

The inclussionary housing policy is based on the experience of other countries and we have taken the better part of two years investigating it, lobbying around it and refining it. We would want to present it to you today because it forms part of the physical environment that helps us get to the third segment, unlocking the dead assets that lie in predominantly black townships. Ultimately, it is our aim to create functioning housing markets.

It is against the background of such a partnership that I am confident that we would overcome the challenges we face with regard to the secondary housing market. For we have the necessary policies and programmes in place including the partnerships that would make these work. Of note to mention with regard to partnerships is the working relationship we have developed with the South African Property Owners Association, the body that facilitated agreement on the inclussionary housing policy.

Finally, let me once again emphasize that our view of a single integrated housing market and the steps needed to realize that comes logically from both the experience and the huge financial investments we have made in housing since 1994. De Soto, unfortunately, has no intellectual claim over what we have developed and continue to fine-tune!