High interest rates coupled with low supply of affordable houses continue to slows down the growth of Tanzania’s housing sector a report by Bank of Tanzania has shown.
The Tanzania Mortgage Market update by Bank of Tanzania (BoT) says the prevailing housing deficit in Tanzania stands at about three million housing units with a 200,000 unit annual demand.
It has been discovered that many lenders offer loans for equity release and home purchase while others offer loans for self-construction which for in most cases are expensive beyond the reach of the average Tanzanian.
High interest rates charged by financial lenders also pose as another challenge to the growth of the mortgage market. The report further states that during the third quarter of 2016, interest rates offered by financial lenders ranged between 16 -19 percent.
The 182 days T Bill rate also remained on a high side at 15. 49 percent towards the end of September,2016 up from 14.68 percent which was recorded by mid-May 2016. The rising trend on the 182 days TBill rate negatively affects all forms of long term debt, including mortgages.
The Tanzanian government has expressed its commitment to make sure the loan interest rates are kept in reasonable ranges in order to enable many people to acquire loans. The government through the National Housing Corporation (NHC) employed several measures in its power to carry out various projects exclusively meant to resolve the problem.
National Housing Corporation has been carrying out several projects centering on high, medium and low income earners. These efforts have so far bore positive impact in the mortgage market. According to the BoT mortgage market update report, has recently completed one of its major projects in Dar es Salaam.
The NHC’s major recently completed projects in Dar es Salaam include Victoria Place, which consists of 16 flats. Moreover, NHC has launched a country-wide project known as ‘My Home My Life’ offering 5,000 affordable housing units countrywide with prices quoted for the first and second phases of the project ranging between 43.4m/- to 95.3m/-.