Zambian Govt needs to boost the supply of housing
Zambia’s property boom is good for the country in the long run if your blogger was to be asked. With more Zambians having a home to call their own, the country will be more socially stable and economically balanced. The property market underpins social mobility and ensures wealth creation. When people have property assets, they will be more concerned about their future and the future of their children. But property bubbles can be destructive as evident in the housing market crash in West that dragged the economy into a recession. Housing bubbles are caused when demand outstrips supply and people borrow more than they can service. Zambia is still a long way from a housing bubble, even though property prices have risen by 40 percent over the past 50 months.
This is because mortgage levels are still relatively low and demand remains robust. But as prices continue to rise for houses occupied by middle-income as well as lower-income families, developers will have to boost supply to prevent an overheating market. This means that more land will have to be cleared for housing projects and infrastructure built.
This is where Zambian governments must play a bigger role. It has 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. Without such infrastructure, developers are unlikely to take the risk of building in outlying areas. The Lusaka based government must also increase plot ratios as this will encourage more building. With higher plot ratios, developers in other regions like Kitwe can 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, such action will help meet the demands of a fast-expanding middle class.