Minister Madikizela on SONA: Subsidies for Gap Market Good for Some, Not for All

Media Statement by Bonginkosi Madikizela, Minister of Human Settlements

President Zuma's State of the Nation Address on 9 February 2012 was good news for some, not for all. The subsidy to help people earning between R3 501 and R15 000 a month will not benefit everyone, but only a limited few and on a first come first serve basis.

I welcome the government's initiative to provide a housing subsidy of up to R83 000 for people earning between R3 501 and R15 000 a month so that they may be helped to buy a property. I have been calling for years for measures to assist the people in the so-called gap market to become land and home owners, for these are the hard working people, often nurses, teachers and policemen, who are able to contribute towards our economy and pay for services yet find it difficult to afford a house.

However, the subsidy will need to be drawn from the Western Cape Government's budget allocation, and we will not be given any extra funding for this. As such, the amount of subsidies we will be able to offer will be limited and offered on a first come first serve basis. I would welcome an increase in the Western Cape Human Settlements budget in order to better serve the gap market. The statement of R83 000 for everyone must be clarified. Those earning R3 501 per month will qualify for the full subsidy of R83 000, which will be decreased on a sliding scale as the income of the applicant increases, which might result in those earning R15 000 receiving around R4 000.

My view is that through stabilising the property market and transferring assets into the hands of more people who can pay for and maintain these assets and lowering the costs of their mortgages, we will avoid a financial crisis bought upon by the collapse of the middle income property market, as was recently seen in the sub-prime mortgage crisis in the Unites States. As such, I would like to see a much greater amount made available for this fund so that the hundreds of thousands of earners in this category in our province can be assisted and people can be quickly empowered with asset ownership.

Secondly, I welcome the President's initiative to provide a R1 billion fund to help people with poor credit history get mortgage approvals, but I doubt that the programme will begin in April because in order to implement this programme, we need to be ready with the policy and administrative structures to implement the initiative and, as of yet, have received no clarity or guidance from the National Housing Fund Corporation on the implementation. The sooner we clarify this the better as this will raise unrealistic expectations from the public.