Africa’s housing market needs a boost
Africa’s property boom is good for the continent in the long run bearing in mind more than half of urban population lives in shanties. With the exception of Mauritius, any other country I have traveled to in Africa has slum dwellers living in sprawling areas that lack water, electricity and roads among others. With more Africans having a home to call their own, the continent will be more socially stable and economically balanced in the next few decades. Back home in Australia, the property market underpins social mobility and ensures wealth creation. Studies show most Australians who have property assets, become more concerned about their future and the future of their children. Africa’s property prices have risen by close to 200 percent over the past three years mainly driven by emerging middle class purchasing power. This is what has made one of Africa’s largest cities Nairobi to be the most expensive city to rent a house. Nairobi is no ordinary city anymore as it houses IBM, Google, Nokia, among other multinationals operating in sub Saharan Africa. Mortgage levels are still relatively low and demand remains robust in a continent of over 1billion people.
There is also need for government to increase land allocation for property development that will encourage more construction. In a guaranteed higher land ratios, property developers could maximize the size of a piece of land, allowing them to build at a greater intensity. This applies to both low-cost housing as well as middle-income homes. With the ongoing property boom in Africa, such action will help meet the demands of a fast-expanding middle class across the continent. But as prices continue to rise for houses occupied by middle-income as well as lower-income families, I do believe that property developers across the continent will have to boost supply to prevent an overheating market. By this I mean that more land will have to be cleared for housing projects. This is where the individual governments must play a bigger role. They have to invest much more in macro-infrastructure such as roads, power plants and other public facilities, especially in new areas, to encourage developers to build as countries like Kenya and South Africa are doing with satellite cities. Without such infrastructure, developers are unlikely to take the risk of building in outlying areas.