Impact of macroeconomic indices on incremental housing value
| Year | Value of incremental housing in the NHFC portfolio | Macroeconomic impacts |
|---|---|---|
| 2003 | The NHFC receives its second-largest income after investments from incremental housing, which offers the best returns in terms of interest collected on loans | A significant rise in interest rates. the removal of stamp duty and the elimination of transfer fees for real estate transactions involving residences valued at less than R140,000 (up from R100,000 the previous year) |
| 2004 | The total lending and advance portfolio climbed 9% during the year, rising from R615m to R673m | In the latter part of the year, interest rates were significantly cut, which helped low- to moderate-income people by lowering the cost of housing |
| 2005 | The income after tax was lower especially in the social and incremental housing segments of the market | • Lower interest rates and sluggish client loan take-up • Low inflation and interest rate levels, as well as an increased threshold for the transfer expenses exemption (currently R190,000), both of which were announced in the Budget 2005/2006. |
| 2006 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2007 | Even though the overall number of incremental loans and units was less than anticipated, the number of disbursements nearly tripled | With R1,659m in total income, it exceeded expectations in part because interest rates rose over the course of the year |
| 2008 | New financing options were created including the Joint Venture initiative, South African Post Office retail infrastructure, Pan African Capital Holdings | • The Reserve Bank’s interest rate increases significantly impacted the low- to middle-income earners’ capacity to fulfil their obligations under loan arrangements • The target market for the NHFC was severely impacted by increasing inflation, gasoline price rises and rising interest rates |
| 2009 | In the second half of the year, the demand for incremental home loans rose after it had been slow in the first half. By year’s end, 90% of the budget had been met, however, for larger individual loan amounts and fewer loans overall | While the lower- to middle-income earner’s debt burden was lessened by the 4.5% interest rate drop, the majority was still trapped in debt. Increased unemployment made this worse |
| 2010 | More money is being spent on financing housing units than on making home upgrades or taking out incremental loans, which has changed the composition of the commercial book | Despite a trend of falling interest rates beginning at the end of 2008 and continuing through 2009, households continued to face some financial strain because of significant job losses across a wide front, declining real disposable income and comparatively high debt levels |
| 2011 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2012 | Homeowners concentrated on enhancing their current residences rather than investing in new homes, which improved the performance of the incremental loans company | Given the affordability challenges in the market, there was a notable shift in appetite from homeownership to incremental housing |
| 2013 | The year was distinguished by a considerable uptick in business development, which resulted in a sizable number of approvals totalling R14bn, creating a strong pipeline for subsequent payments | Despite low interest rates, the South African economy is still struggling |
| 2014 | The NHFC has also noted the continued low appetite for wholesale funding from its non-banking retail intermediaries who provide solutions, mainly for incremental housing | The economic environment, which is characterised by slow economic development, high household debt levels, high unemployment and growing regulatory burden, continues to put a strain on the NHFC |
| 2015 | Because the market for this product is heavily indebted and has little to no capacity to take on more debt, unsecured incremental housing business was not actively pursued | Because of South Africa’s GDP growth slowing to 1.5% in 2014 from 2.2% in 2013, the country’s economic climate deteriorated during the year under review. The exchange rate, wage agreements and electricity price rises are a few of the major dangers to inflation |
| 2016 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2017 | The households and clients of the NHFC continue to suffer as a result of the current depressed economic and market conditions, which has an effect on both the growth rate and the calibre of the advances book | |
| 2018 | Asset growth supported by quality of revenue through a portfolio mix that promotes sustainability | Up until the end of 2017, both the planning and construction phases of the building market (for new privately financed housing) remained largely dormant. This is primarily because of the country’s slow economic growth, which is reflected in the GDP growth of 1.3% for the year that ended on 31 December 2017 |
| 2019 | Development Bank of Southern Africa (DBSA). The DBSA has been a funder of RHLF for many years and this funding partnership enabled RHLF to scale up delivery of incremental loans in rural areas. With the merger of RHLF to NHFC effective 1 October 2018, the loan was transferred to NHFC | As a development finance institution, the NHFC believes it is their duty to make countercyclical investments and stimulate the economy and to grow the distribution of incremental loans in rural areas |
| 2020 | The business environment that prevailed towards the end of the financial year end adversely affected intermediaries which led to lower disbursements as clients held back disbursements in Quarter 4, due to COVID-19 risks | A portion of the lack of use of licensed facilities by some incremental housing finance intermediaries can be attributed to the poor economic growth and difficult economic conditions, particularly the high unemployment rate |
| Year | Value of incremental housing in the NHFC portfolio | Macroeconomic impacts |
|---|---|---|
| 2003 | The NHFC receives its second-largest income after investments from incremental housing, which offers the best returns in terms of interest collected on loans | A significant rise in interest rates. the removal of stamp duty and the elimination of transfer fees for real estate transactions involving residences valued at less than R140,000 (up from R100,000 the previous year) |
| 2004 | The total lending and advance portfolio climbed 9% during the year, rising from R615m to R673m | In the latter part of the year, interest rates were significantly cut, which helped low- to moderate-income people by lowering the cost of housing |
| 2005 | The income after tax was lower especially in the social and incremental housing segments of the market | • Lower interest rates and sluggish client loan take-up |
| 2006 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2007 | Even though the overall number of incremental loans and units was less than anticipated, the number of disbursements nearly tripled | With R1,659m in total income, it exceeded expectations in part because interest rates rose over the course of the year |
| 2008 | New financing options were created including the Joint Venture initiative, South African Post Office retail infrastructure, Pan African Capital Holdings | • The Reserve Bank’s interest rate increases significantly impacted the low- to middle-income earners’ capacity to fulfil their obligations under loan arrangements |
| 2009 | In the second half of the year, the demand for incremental home loans rose after it had been slow in the first half. By year’s end, 90% of the budget had been met, however, for larger individual loan amounts and fewer loans overall | While the lower- to middle-income earner’s debt burden was lessened by the 4.5% interest rate drop, the majority was still trapped in debt. Increased unemployment made this worse |
| 2010 | More money is being spent on financing housing units than on making home upgrades or taking out incremental loans, which has changed the composition of the commercial book | Despite a trend of falling interest rates beginning at the end of 2008 and continuing through 2009, households continued to face some financial strain because of significant job losses across a wide front, declining real disposable income and comparatively high debt levels |
| 2011 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2012 | Homeowners concentrated on enhancing their current residences rather than investing in new homes, which improved the performance of the incremental loans company | Given the affordability challenges in the market, there was a notable shift in appetite from homeownership to incremental housing |
| 2013 | The year was distinguished by a considerable uptick in business development, which resulted in a sizable number of approvals totalling R14bn, creating a strong pipeline for subsequent payments | Despite low interest rates, the South African economy is still struggling |
| 2014 | The NHFC has also noted the continued low appetite for wholesale funding from its non-banking retail intermediaries who provide solutions, mainly for incremental housing | The economic environment, which is characterised by slow economic development, high household debt levels, high unemployment and growing regulatory burden, continues to put a strain on the NHFC |
| 2015 | Because the market for this product is heavily indebted and has little to no capacity to take on more debt, unsecured incremental housing business was not actively pursued | Because of South Africa’s GDP growth slowing to 1.5% in 2014 from 2.2% in 2013, the country’s economic climate deteriorated during the year under review. |
| 2016 | NA (Incremental lending was not sufficiently addressed in this report) | NA (Incremental lending was not sufficiently addressed in this report) |
| 2017 | The households and clients of the NHFC continue to suffer as a result of the current depressed economic and market conditions, which has an effect on both the growth rate and the calibre of the advances book | |
| 2018 | Asset growth supported by quality of revenue through a portfolio mix that promotes sustainability | Up until the end of 2017, both the planning and construction phases of the building market (for new privately financed housing) remained largely dormant. This is primarily because of the country’s slow economic growth, which is reflected in the GDP growth of 1.3% for the year that ended on 31 December 2017 |
| 2019 | Development Bank of Southern Africa (DBSA). The DBSA has been a funder of RHLF for many years and this funding partnership enabled RHLF to scale up delivery of incremental loans in rural areas. With the merger of RHLF to NHFC effective 1 October 2018, the loan was transferred to NHFC | As a development finance institution, the NHFC believes it is their duty to make countercyclical investments and stimulate the economy and to grow the distribution of incremental loans in rural areas |
| 2020 | The business environment that prevailed towards the end of the financial year end adversely affected intermediaries which led to lower disbursements as clients held back disbursements in Quarter 4, due to COVID-19 risks | A portion of the lack of use of licensed facilities by some incremental housing finance intermediaries can be attributed to the poor economic growth and difficult economic conditions, particularly the high unemployment rate |