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reall Stakeholder*group*meeting 14*April*2016 2 - PDF document

1 Addressing*the*Challenges*of*Housing* Finance*in*Africa Kecia*Rust reall Stakeholder*group*meeting 14*April*2016 2 8UUQMQNaUTQcMeTQeMQRUZMZOQPg 7QMZPFQZMaP$)10, 3


  1. 1 Addressing*the*Challenges*of*Housing* Finance*in*Africa Kecia*Rust reall Stakeholder*group*meeting 14*April*2016 2 8U�UQ��M�Q�NaU����TQ�cMe��TQe�M�Q�RUZMZOQP�g 7Q���MZP�FQZMaP$�)10,

  2. 3 Housing*in*Malawi* (Integrated* Household*Panel*Survey*2013) : • 41%*households*live*in*traditional* dwellings • 26%*in*semiBpermanent*housing • 33%*in*permanent*dwellings* (51%*in*urban*areas) The*macroIeconomic* • 46%*of*urban*households*rent context*is*not*favourable • Most*housing*built*by*owners,* • High*interest*rates:*32% paid*for*in*cash*and*with*savings • High*inflation:*23.4% • Few*developers • Limited*infrastructure Housing*pressures*are*increasing • No*national*ID*system • Almost*half*of*the*population*is*under*14 • Very*low*lending*to*real* • Very*rural,*with*a*high*urbanisation rate:* estate*activities:*1.1%*of* 3.8% GDP*in*2014 • Moderate*unemployment:*7.6% • 16.1%*of*Malawians*have* • Very*low*affordability:*61.64%*live*on* a*bank*account less*than*$1,25/day 8U�UQ��M�Q�NaU����TQ�cMe��TQe�M�Q�RUZMZOQP�g 7Q���MZP�FQZMaP$�)10, ;UbQ�����UQ�� 4 OTM�MO�Q�U�Q 6R�UOMi�� T�a�UZS�RUZMZOQ� �M�WQ���UZ��()- )& �ZZ�bM�U�Z�UZ�RUZMZOUZS �& ���cUZS�McM�QZQ����R��TQ� ������aZU�e�UZ��Q�UPQZ�UM� �& HTQ�UPQZ�URUOM�U�Z��R�ZUOTQ� �M�WQ���MZP�MZ�M���QOUM�U�Z� �R��TQ�MRR��PMNU�U�e�OTM��QZSQ ,& D��UOe����QSa�M���e�Qb��a�U�Z� ����M�OT�UZbQ�����UZ�Q�Q�� -& ���cUZS�Qd�Q�UQZOQ�MZP� UZbQ�����UZ�Q�Q�� The*Housing*Finance*in*Africa*2015*Yearbook* can*be*downloaded*from* http://www.housingfinanceafrica.org/documen t/2015IhousingIfinanceIinIafricaIyearbook/

  3. 5 �ZZ�bM�U�Z�UZ�RUZMZOUZS FQM��:��M�Q��ZbQ���QZ��H�a��� A���SMSQ��U�aUPU�e�RMOU�U�UQ� �Z�Q�ZM�U�ZM��e�MOOQ��QP�UZbQ���QZ�� :AF8��((/����HAF8��()(���8FF���()���� ! ! ���aO�a�Q BAF8��(), 6SS�QSM����2�QZMN�UZS�NUS���ZQe���� GTM�QT��PQ���M�Q�S�bQ�Z�QZ�$�UZbQ�������� ! ! �QQ����M������VQO�� ����SMSQ��QZPQ���g �QZPQ���TMbQ�h�WUZ�UZ��TQ� SM�Qi 6��U����UZbQ������PUbQ��URe��TQU���M�SQ�� ! �ZO�QM�Q��TQ�MbMU�MNU�U�e��R���ZS%�Q���RaZPUZS$� ! �Z�?QZeM$�HMZfMZUM$�G�a�T�6R�UOM$� ! ����QZPQ���M�Q�O�ZRUPQZ������QZP��bQ����ZSQ�� LU�NMNcQ2�PURRQ�QZ��bQ��U�Z���R� �Q���$�MZP�NaU�PQ���O�ZRUPQZ�����NaU�P 9QbQ����QZ��F:�H��MZP��ZbQ���QZ�� F:�H� FQPaOQ��O�����R�RaZPUZS$�����QPaOQP��QZPUZS� ! �M�Q$��MWUZS�T�a�UZS���MZ�����Q�MRR��PMN�Q FQPaOQ��NM��UQ������QZ��e�R�����M��Q������SMSQ� ! ��a�UZS��UO��RUZMZOQ ��MeQ�� BUOTQ��M�WQ���QZPQ��2�GQ�QO��6R�UOM ! G�MZPM�PU�Q� �TQ�����SMSQ��M�WQ�$��MWUZS�U�� ! B�C���O���Q�OUM���UZWMSQ�2�F:6@@$� ! QM�UQ��R���UZbQ���������aZPQ���MZP��U�W��� �MNU�M��R����a�MZU�e��Z�Q�ZM�U�ZM� QZSMSQ�cU�T�M����TQ���MeQ�� 8QZ��M��7MZW�M��QZ�U�Z��Z��TU���UZW�UZ� ! �TQ�bM�aQ�OTMUZ �ZO�QM�UZS�UZPa���e���SMZU�M�U�Z ! I�QRa���UZW�UZ���GA:��QZPUZS��QO��� ! �ZZ�bM�U�Z�UZ�RUZMZOUZS 6 Prevailing3mortgage3interest3rates,3and3term 35,00 Mortgage3interest3 rate3(%)3and3term3(years) 30,00 25,00 20,00 15,00 10,00 5,00 0,00 Central3 African3… Malawi Sierra3Leone Tanzania Zambia South3Sudan DRC Cote3d'3Ivoire Angola Benin Burkina3Faso Seychelles Zimbabwe Madagascar Guinea3Bissau Senegal Mali Togo Chad Somalia Ghana Algeria Egypt Uganda Nigeria Gambia Mozambique Comoros Rwanda Kenya Burundi Cameroon Eritrea Ethiopia Namibia Lesotho South3Africa Djibouti Libya Mauritius Niger3 Tunisia Liberia Morocco Mortgage3Interest3Rate3(%)3 Mortgage3Term3(years)# Most*countries*offer*mortgages*at*rates*above*10%,*and*for*less*than*20* years,*highlighting*very*real*macroBeconomic*issues*that*challenge*housing* affordability.**In*Malawi,*one*might*as*well*buy*a*house*with*a*credit*card.

  4. �ZZ�bM�U�Z�UZ�RUZMZOUZS 7 Mortgage3to3GDP3vs3prevailing3mortgage3interest3rate3and3term 30 35,00 28 Mortgage3interest3 rate3(percent)3 and3term3(years) 30,00 25 22,54 22,15 Mortgage3to3GDP3(percent) 25,00 20 18,21 20,00 15 15 12,99 15,00 10 9,25 10,00 6,59 5 3,85 3,64 3,53 3,31 2,83 5,00 1,29 1,16 1 1 0,9 0,58 0,5 0,5 0,49 0,46 0,34 0,25 0,14 0,07 0,07 0 0,00 Average3 Mortgages3%3of3GDP° Mortgage3Interest3Rate3(%)3 Mortgage3Term3(years)# Linear33(Mortgage3Interest3Rate3(%)3) African*mortgage*markets*are*tiny*(and*data*is*limited). Lower*interest*rates*seem*to*correlate*with*larger*mortgage*markets. ���cUZS�McM�QZQ����R��TQ�������aZU�e��R� 8 �Q�UPQZ�UM� Global* Insights* from*the*Financial* Times The*Middle*Class* The*FDI*Story Growth*Story

  5. 9 HTQ�UPQZ�URUOM�U�Z��R�ZUOTQ��M�WQ���MZP�MZ�M���QOUM�U�Z��R��TQ� MRR��PMNU�U�e�OTM��QZSQ Price'of'the'cheapest,'newly'built'house'by'a'formal'developer $200 000' 250 Price'of'the'cheapest,'newly'built' house'by'a'formal'developer Price'of'the'cheapest,'newly'built'house'by'a'formal'developer'in'2015'(US$) $180 000' Price'of'the'cheapest'newly'built'house,'by'a'formal'developer'in'2014'(US$) $160 000' 200 Price'of'the'cheapest'newly'built'house,'by'a'formal'developer'in'2013'(US$) Price'of'the'cheapest'newly'built'house,'by'a'formal'developer'in'2012'(US$) $140 000' Size'of'that'house'(m2) Price'of'the'cheapest'newly'built'house,'by'a'formal'developer'in'2011'(US$)' $120 000' 150 What'is'the'size'of'this'house'(in'm2)'in'2015? $100 000' $80 000' 100 $60 000' $40 000' 50 $20 000' $& 0 … South'Africa Central'African' Mozambique Angola Seychelles Madagascar Comoros Somalia Eritrea Zambia Gambia Libya DRC Ethiopia Rwanda South'Sudan Algeria Mauritius Djibouti Sierra'Leone Tunisia Burundi Ghana Senegal Tanzania Namibia Zimbabwe Kenya Cote'd''Ivoire Nigeria Benin Liberia Lesotho Morocco Malawi Uganda Niger' Burkina'Faso Egypt Togo Mali Guinea'Bissau Botswana Cameroon G�a�OQ2�:�MU��O���Q���ZPQZOQ�cU�T ��OM����MO�U�U�ZQ��$�MZZaM��e DeveloperBbuilt*housing*targets*the*higher*end,*and*happens*rarely*at*scale.**But*even* a*$20*000*house*is*unaffordable*for*the*majority*– and*these*are*only*available*in* limited*projects.*Most*housing*is*built*by*the*owner,*incrementally,*stepBbyBstep.** HTQ�UPQZ�URUOM�U�Z��R�ZUOTQ��M�WQ���MZP�MZ�M���QOUM�U�Z��R� 10 �TQ�MRR��PMNU�U�e�OTM��QZSQ Average%annual%household% income%versus%housing%affordability $65 925 $200%000 $78%567 $40 000% $40 000% $35 000% $35 000% $30 000% $30 000% $25 000% $25 000% $20 000% $20 000% $15 000% $15 000% $10 000% $10 000% $5 000% $5 000% $" $" Djibouti Equatorial%Guinea Sao%Tome%and%Principe Burundi Mauritius Botswana Swaziland Tunisia Namibia Gabon South%Africa Angola Algeria Morocco Cape%Verde Nigeria Cote%d'Ivoire Zimbabwe Egypt Libya Lesotho Sudan Mauritania Zambia Cameroon Comoros Ghana Kenya Sierra%Leone Togo Gambia Benin Uganda Guinea"Bissau Burkina%Faso Mozambique Mali DRC South%Sudan Liberia Rwanda Tanzania Guinea Malawi Niger Chad Ethiopia Somalia Central%African%Republic Madagascar Eritrea Seychelles Senegal Average,% annual%HH%Income%(urban,%2014) Average,% annual%HH%Income%(rural,%2014) Average% Annual%Income%required%to%afford%the%cheapest%newly%built%house%built%by%a%private%developer%(2015) The*gap*between*what*“affordable”*housing*would*cost*to*finance,*and*what* the*average*household*can*afford*to*pay,*is*simply*too*large.**In*most* countries,*even*$25*000*is*too*much*for*the*average*incomeBearner.

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