Image: pixels Kenya

Housing finance is the main factor affecting the availability and affordability of housing especially for Africa’s poor households. In relation to housing finance, a report by the Centre for Affordable Housing Finance in Africa (CAHF) has highlights five things that characterize the African housing market today.

Increasing investor interest

Investment momentum on the continent has been compounded over the past few years with a number of real estate focused funds and initiatives being established or pursued by international as well as local capital. Although the majority of investors have been more inclined to focus on high-end housing in the past years, recent action by governments and concerned stakeholders is turning investors towards affordable housing.

Poor targeting

In some places, investors have focused too much on high-end properties. This has resulted in some projects not achieving the expected returns in those markets due to oversupply which has seen developers struggle to fill or sell units. This may dampening investor enthusiasm leaving opportunities untapped.

Related; SACCOs take on the housing challenge

Insufficient scale

The African continent is still massively undersupplied with regard to housing while housing projects currently underway across the continent are barely scratching the surface of real and potential demand.  Particularly in the residential sector, investors and governments have the potential for rental housing to support labour market mobility if affordability limits are taken into account.


The study by CAHF established that on average, most African households can afford a house at a price of US$7500. In Kenya for instance, the study found that at current prices, only 8 per cent of the population can afford a modern decent house. However, up to 61 per cent could afford decent housing at US$7500.

Opportunities in the affordable housing market are significant, the study estimates that there is a potential to construct 52 million affordable houses across the continent generating about US$400 billion of economic activity in construction alone. To accomplish this, there is greater need for better policy and regulatory frameworks across Africa.

Real Estate Investment Trusts and SACCOs

REITs and SACCOs have gained traction on the continent in recent years. The realization that past methods of financing are not enough to handle present challenges has partly contributed to this. These financial mechanisms have provided the ability to aggregate the breadth of the demand into investable initiatives, creating new opportunities.

In the information age, data is also needed to support further developments in real estate markets as housing finance becomes even more important.

Next; Can REITs solve the affordable housing challenge in Africa?