The African Development Bank estimates that 20% of the African population earns more than $20 a day, which is promising if mortgage systems become sufficiently sophisticated to make it more affordable for Africans to own their own homes.
Rust says that one very interesting option emerging in Africa is housing microfinance.
“There is a need for non-collateralised loans from a variety of schemes to give people that do not have the steady income, employment security, and tenure security needed to secure a loan in the mortgage market access to finance for incremental building and home-improvements,” she said.
Microlenders are increasingly coming to market, but there needs to be regulatory support to take their investments to scale, she said.
“The really important thing here is we need cheaper houses, and we need government, lenders and developers to start having the necessary conversations across the continent to find a way to build cheaper houses in a sustainable way.”
A course at the University of Cape Town Graduate School of Business aims at looking at housing finance for Sub-Saharan Africa. It will run from October 7 to 12 this year.
Marja Hoek-Smit, director of the Housing Finance programme for Sub-Saharan Africa at the UCT Graduate School of Business and researcher in urban mass-housing at St. Catherine College, Oxford, said the housing backlog has to be prevented from growing.
“The first step must be to prevent further backlogs and the spread of informal and squatter areas,” she said. “This is far from where we are now. We have to think of measures we have to instate to get massive housing going for at least 70% of the population.”
The focus must be on getting the private and public sectors to create as much new housing as possible to house new household formation,” she said. “And, this cannot be done by only building in the upper, upper-middle income levels in the hopes that housing will filter down to low income levels.”
For all of this to happen, Hoek-Smit said, there is a need for finance at many different levels.
Runaway housing prices and unsophisticated mortgage systems are hampering efforts across Africa to house its people.
This is a situation that experts claim is preventing many countries from reaping the social and economic benefits that housing security provides.
Going beyond a roof overhead, housing creates employment during the development phases, and improves quality of life, social standing, health, financial position, security, social cohesion and access to education.
The Absa housing index, shows that in South Africa the average price of small houses have risen from R660 953 in the first quarter of 2011 to R777 343 in the fourth quarter of 2012.
In the affordable segment, the price rose from R292 790 in 2009 to R345 388 in 2012.
In both cases, there has been a 17% increase. In Kenya, prices increased by roughly 76% between 2008 and 2012.
According to Allan Kundu at the University of Witwatersrand, such numbers are common across the continent.
Housing is central to economies as capital assets contributing to “production, savings, consumption, household income, employment, growth of other markets, social welfare, diversification and investment, and meeting a basic need” he said.
The high prices of housing are, however, likely to condemn many people to perpetual squalid living conditions because of the lack of affordability for the majority of citizens.