Affordable housing in Uganda still inadequate - real estate expert

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Posted  Wednesday, December 18  2013 at  02:00

In Summary

The housing deficit in Uganda is estimated in the excess of 1.6 million housing units.



Inability of property developers to carry out research about housing needs before undertaking projects is to blame for the mismatch between the supply of affordable housing and demand, a real estate official has said.

Knight Frank managing director Judy Rugasira, talking on the sidelines of the Uganda Real Estate Investment Summit in Kampala, said property developers have not done enough research to find out the needs of their target market, resulting into a mismatch between what the market wants and what is put out.

“Developers should do research to know who their target market is, the type of products they need and the price they can afford to minimize price differentials and variances,” Ms Rugasira said on Monday.
Despite developers putting up a number of houses for sale, a sizable stock of units remain vacant as many Ugandans cannot afford them.

This explains the housing shortage in the country, estimated in the excess of 1.6 million housing units and expected to hit 8 million by 2020 if measures are not taken, according to figures from the Ministry of Lands and Housing.

Although there is no readily available data about how many housing units on the market yet to be bought, a survey around many real estates in and around Kampala confirms that many of these properties remain vacant.

However, Ms Rugasira said while the cost of owning land and construction is high, developers need to be realistic about how much profit they make off the property. “While profit made off a property should be between 25-28 per cent, some developers want to get as much as 30-40 per cent, making it too expensive. This is one of the reasons why some houses have remained unsold for so long,” she said.

Unaffordable houses and expensive mortgages

The price of a three bedroom self-contained house ranges between Shs200 and Shs300 million while a two bedroom house goes for not less than Shs150 million. This is very high for many ordinary Ugandans who would have wanted to own houses.

Mr Michael Mwesigwa, Head of Home Loans, Stanbic Bank, said houses on the market are unaffordable to many Ugandans, something that has also constrained growth of the mortgage market in Uganda. It should be noted that mortgages are too expensive, with interest rates as high as 17 per cent, inhibiting potential home owners from buying houses.

Players said it is not possible to construct houses that go for about Shs30 million that could be affordable to low income earners, citing the high costs involved in putting up the facilities which affects the final price.