The dream of homeownership for many Ugandans remains a formidable challenge as the nation grapples with a staggering housing deficit of 2.4 million housing units. This deficit casts a shadow over the aspirations of countless Ugandans who yearn for a place to call their own.
In this pressing scenario, the quest for accessible housing financing solutions becomes paramount.
It is no doubt that the housing crisis in Uganda especially in urban areas profoundly affects the lives of many Ugandans.
The report titled, “The 2022 Housing Finance Yearbook: Uganda Profile,” released by the Centre for Affordable Housing Finance Africa in December last year, provides insights into the housing market in Uganda, including information on affordability, housing finance policies, housing deficit, housing demand and supply, initiatives, and property markets.
With respect to housing supply, the report reveals that Uganda’s high population growth rate coupled with a high urbanisation rate translates into a widening gap between the demand and supply of decent housing units.
“The current housing deficit is estimated at 2.4 million housing units with the bulk of these falling in the affordable housing segment. On the supply side are private developers delivering housing units of approximately 1 000 units a year. These complement individual households developing their own residential units for owner occupation. Given the housing gap, nearly half (48.3%) of the country’s urban population live in informal settlements,” the report reads in part.
But shouldn’t Uganda’s growing population present a unique opportunity for investment in the residential housing marketplace?
The report says that the current influx of housing units is largely in the middle to high-end space, targeting largely the corporate salaried income earners with access to mortgage facilities from the banking industry.
It, however, adds that the bulk of the 2.4 million housing units needed are in the affordable housing segment with most prospective homeowners being in the low income segment of the population.
Meanwhile, the regulations on using retirement benefits to secure a residential mortgage should offer an excellent opportunity for both lenders and housing developers to increase the scope of their product offering to this emerging niche.
At the household level, the demand for residential real estate is still robust, particularly for housing units located in planned residential estates. Several
property developers in the Greater Kampala Metropolitan Area covering the Kampala district and urban areas of Wakiso district have seen some of their on-sale properties bought in the shortest time possible, particularly less than three months.
“Prices as measured by the Residential Property Price Index (RPPI) for Greater Kampala Metropolitan Area fell by 5.8% over the quarter to March 2022 compared to a 4.5% decline over the quarter to December 2021,” the report revealed.
This noted decrease in RPPI is mainly attributed to a 7.9% drop in Residential Property Inflation for Kampala in March 2022, compared to the earlier 17.4% increase over the quarter to December 2021.
The report says that the reductions have also been strongly influenced by foreclosures, particularly where the borrowers have failed to meet their obligations for the sectors where the CRM program expired on 30 September 2021.
But can Uganda’s housing crisis be easily solved?
It is worth noting that the housing crisis in Uganda is a complex issue with no easy solutions. However, by taking a comprehensive approach that addresses the supply, demand, and financing dimensions of the problem, the government of Uganda can make significant progress in addressing this challenge.
It is also important to engage with all stakeholders, including private developers, financial institutions, and civil society organizations, to develop and implement effective solutions. The government should create a conducive environment for investment in the housing sector.
The government of Uganda should focus on increasing the supply of affordable housing units by providing incentives to private developers to construct affordable housing units, and by investing in public housing projects.
The government can also improve access to housing finance by working with financial institutions to develop innovative mortgage products that are tailored to the needs of low-income borrowers.
Furthermore, the Ugandan government can provide subsidies to help low-income borrowers afford down payments and monthly mortgage payments.
By addressing the housing crisis, the government of Uganda can improve the lives of millions of Ugandans and boost the country’s economic development.