Nedbank Corporate and Investment Banking (CIB), together with Sandton-based International Housing Solutions (IHS) have joined the South African Multifamily Residential Rental Association (Samrra).

Nedbank CIB is now the third large bank working alongside institutional multifamily rental investors to build a stronger and more investable rental housing ecosystem.

The affordable housing market is increasing shifting from a fragmented one to a strategic investment class, based on fundamentals driving demand for more affordable housing solutions.

Nedbank CIB property finance executive Vanessa Murray said that, by joining the association, it affirmed the bank’s belief of the transformative potential of the multifamily sector as a catalyst to bridging South Africa’s housing gap and that it was a resilient investment category that warranted sustained financial innovation.

Samrra has created a platform where investors and developers can collaborate, which brings more financial tools and expertise to the fore that can unlock new forms of housing delivery.

According to Samrra CEO Palesa Mkhize the affordable housing sector is becoming central to property investment.

During IHS and Nedbank CIB’s yearly affordable housing conference, which was hosted on September 3, IHS group MD Rob Wesselo confirmed the same sentiment, that more institutional investors were entering the affordable housing market, not only through debt provision but equity investment.

The increased professionalism in the sector meant it could deliver higher impact, he added.

Murray said during her address the future of housing, which was the theme of the conference, required more than capital; it required leadership, innovation and partnerships.

“Banks are key to unlock more housing delivery, including by applying expertise in navigating economic cycles and incorporating environmental, social and governance performance principles,” she stated.

For Murray, affordable housing goes beyond initial affordability. It is planned with lower cost of living in mind by being stationed closer to workplaces and opportunities, as well as improved quality of living through amenities and services on offer.

She explained housing developments were becoming increasingly sustainable to include social cohesion and reduced environmental impact.

However, a lot of investments are held back by slow planning approvals and a lack of enabling infrastructure in many parts of the country, which should hopefully be addressed through Operational Vulindlela Phase 2 which includes a focus on improving municipal service delivery.

Murray cited an example whereby Cape Town would amend its municipal land use laws to increase residential density without rezoning, which iwas an enabling policy change for more affordable housing developments.

Nedbank chief economist Nicky Weimar outlined how cyclical pressures have weighed on consumers and therefore also the property sector in recent years; however, there were positive signs of growing consumer spend on the back of eased inflation and lower interest rates, which encouraged investment in the residential sector.

She explained that average wage and salary increases now outweighed inflation, which improved household purchasing power.

Inflation is expected to rise again modestly, with food prices and electricity tariffs being key drivers, but this will be offset by falling fuel prices owing to an influx of oil supply in the global market.

Weimar said the rand had shown resilience against the US dollar, partly owing to the dollar’s overvaluation that was now normalising and global investors' concern about US economic policies weighing on the dollar’s strength.

She ultimately expects further interest rate cuts in South Africa to be positive for the property market, with increased demand for home loans, while the South African Reserve Bank works to anchor inflation around 3% over the longer term.