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Fiscally Unsustainable Social Welfare, Untenable Housing Solutions and the Mortgage Default Ratio in South Africa

International Journal of Finance & Banking Studies

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Title Fiscally Unsustainable Social Welfare, Untenable Housing Solutions and the Mortgage Default Ratio in South Africa
 
Creator Moss, Vuyisani Vuyisani; University of Witwatersrand
 
Subject —
Finance; Mortgage; Housing; Credit; South Africa
 
Description This article reflects on social welfare system and governance of housingmarkets from an end-user perspective. The article critically analyses the wayin which social welfare has correlated to unsustainable development and createdself entitlement behaviours and attitudes in the South African low incomehousing market.  The phenomenon wasdemonstrable by empirical research whose findings confirmed an existence of anassociation between a fully subsidized social housing model (as underpinned bySouth Africa’s social welfare) and propensity to default on mortgages.  The study found that the risk of default byhomeowners in the low income housing market in South Africa is influenced bygovernment’s housing grant model. In other words, the research established thatthe principle of servicing a mortgaged starter property (that is almost similarto a government free house by both structure and design) is not universallyaccepted by homeowners of these mortgaged houses.  The unintended consequences are that thesystem has created indefinite expectations that potentially could; (i) erodethe country’s balance sheet; (ii) add to non-payment behaviour; (iii) pressurizethe economic and credit systems; (iv) propagate entitlement attitudes andmindsets; (v) create social instability and (v) widened the country’s balanceof payment deficits.
 
Publisher SSBFNET
 
Contributor —
 
Date 2013-10-22
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/217
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 2, No 4 (2013): October; 45-59
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/217/360