There is growing pressure on the affordable housing sector in sub-Saharan Africa and, therefore, extending housing finance is critical to solving this problem, University of Pennsylvania Wharton School International Housing Finance Program founder and director Professor Marja Hoek-Smit has said.
She was speaking in a session titled ‘Extending Access to Housing Finance for Low Income Earners’, which was held during the thirty-sixth Yearly African Union for Affordable Housing Finance (AUHF) Digital Conference and annual general meeting on November 2.
Hoek-Smit indicated that the growing pressure on the affordable housing sector in the region was the result of a multitude of factors.
She said that these included strong urban growth, increasing land/house prices in urban areas, incomes not keeping track with the cost of housing and limited access to housing finance.
Hoek-Smit said that, across the region, formal affordable supply was stagnating, with a broad segment of urban households suffering from inadequate housing.
She noted that it was not just the very poor who were affected by this, but also, low and lower-middle income households. Moreover, this impacted on both the informal and formal workforce.
Therefore, she emphasised that, to solve this problem, it was critical to extend housing finance.
Hoek-Smit said housing finance for the “underserved” population could no longer be viewed as a small niche market.
The vision the International Housing Finance Program had was for the sector to move towards an integrated housing finance system, she noted.
Hoek-Smit explained that this would entail two areas, namely, deepening mortgage markets for creditworthy households or small landlords with secure tenants, and scaling up microfinancing for housing.
Hoek-Smit added that mortgage lending could be extended for middle/lower income groups and for informally employed people in most countries.
She said this could be done through concerted efforts to improve laws, competition, technology application, instruments and procedures.
She emphasised that this required cooperation across different ministries, central banks, and industry representatives, as well as high-level pollical will and leadership.
Given that each country’s housing finance system is unique, Hoek-Smit noted that reforms in this regard would be path-dependent.
In terms of housing microfinancing, Hoek-Smit said this could bring greater efficiency and scale to the sizable investment that the poor already made in their homes.