Tanzania mortgage market slows as housing demand rises

Saturday September 17 2022

A street in Dar es Salaam. Tanzania’s population is set to grow more than two-fold by 2050, pushing the demand for affordable housing. FILE PHOTO | ANADOLU AGENCY


The growth of the mortgage market in Tanzania slowed in the second quarter of 2022 even as demand for decent housing continued to rise.

According to the central bank's latest update published on September 7 jointly with the Tanzania Mortgage Refinancing Company, the total value of mortgage loans grew by just 1.24 percent between April and June against 1.41 percent growth between January and March.

Outstanding mortgage debt increased from Tsh503.74 billion ($218.07 million) to Tsh509.99 billion ($220.23 million) between the two quarters while the average debt size went up from Tsh81.49 million ($35,276) to Tsh82.56 million ($35,654).

The report acknowledged recent UN predictions that the country's population is on course to grow more than two-fold by 2050, pushing the demand for affordable housing.

At least three million new housing units are needed to cope with the current situation.

The report cited high interest rates as a prime constraint on market growth despite the average mortgage interest rate falling to 17 percent since 2010 from 23 percent earlier.


It also cited "cumbersome processes around issuance of titles (especially unit titles)" as a challenge affecting eligibility of borrowers to access mortgage loans.

It noted that market competition had resulted in the emergence of new lending products offering more favourable terms than mortgages for house building.

Meanwhile, Uganda is grappling with a widening housing deficit even as realtors are pushing the government to expedite the establishment of a mortgage refinancing institution. The latest official data shows the country is grappling with a deficit of over 200,000 housing units annually against a supply of 800 units. The biggest deficit of units is for low-and middle-end markets.