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Johannesburg - President Jacob Zuma's ambitious announcement - that caught the banks unawares - to establish a R1bn housing fund to help eradicate the country's enormous housing backlog, will make little difference to the market at which it is aimed.
This is the view of a housing expert after the announcement in the State of the Nation address took the market by surprise.
Zuma says the purpose of the fund is to provide banks with guarantees to enable them to provide finance to households that earn too much to qualify for a housing subsidy, but too little to afford a new house with a mortgage loan.
Households in the target market earn on average between R3 500 and R7 000 a month, and there are about 2.5m households in this market.
The houses that are available are unaffordable for the target market, even with government guarantees, says Kecia Rust, coordinator for the Centre for Affordable Housing Finance in Africa, a division of the FinMark Trust.
The cheapest houses currently cost R230 000, and to afford this a household needs to earn about R9 000 a month, she says.
Pierre Venter, general manager for bank and financial services at the Banking Association of South Africa (Basa), says the association was unaware of the plans and is currently uncertain about government's intentions.
- Sake24.com
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