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Housing & Finance

housing1

Proper and affordable housing has become a critical issue both in Africa and the rest of the developing world, and demands immediate action by policy and decision makers. The UN-Habitats global report on human settlements and housing finance systems suggests that by 2030, more than two-thirds of people globally will be living in urban cities. The implication of this for the African housing market suggests an increased demand for housing finance in order to secure proper housing mainly for the poor and new house owners in Africa.

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The market for affordable housing in most African countries suffers from insufficient supply of quality units and financial options for potential buyers, falling into the low to low middle income segments. Banks require large deposits, charge high interests rates and other short term loans, conditions which have been worsening due to global economic conditions and domestic liquidity constraints. As a consequence, home ownership remains out of reach for many first time buyers who remain vulnerable to exploitation of landlords in the rental markets.

In spite of these challenges, the market for affordable housing also presents growth opportunities, fuelled by high rates of urbanisation and an emerging middle class.

Housing and finance74Part of the housing challenge in Africa is also as a result of poor planning, poor land management, lack of service delivery and difficulties in securing long-term housing loans to people who want them. Despite the fact that African economies are growing rapidly; affordability of proper housing remains a challenge as a result of rising levels of poverty and lack of long term financing.

The rising costs of building materials have also impacted negatively on the affordability of proper housing units in Africa. In many countries in Africa, the supply of affordable housing has also been constrained by land issues resulting to the low supply of proper housing. Banks are also skeptical about lending to private companies in most African countries, hence making it difficult for private investment in the African housing market.

Influence Africa provides strategies that will leverage support for proper housing in Africa through enabling financial institutions to effectively assist poor people in securing proper housing, through:

  • facilitating partnerships;
  • convening investment forums;
  • capacity building and advisory services in the area of housing and finance; and
  • facilitating training and capacity building for stakeholders in the housing and finance value chain, which includes financial institutions, developers, investors and government agencies.
 

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