Unlocking market intelligence to support the affordable housing sector
By Kecia Rust , Executive Director , Centre for Affordable Housing Finance ( CAHF )
CONTRIBUTOR
The need for housing across Africa is immediately visible and agreed upon . In virtually every city across the continent , evidence of informal and inadequate housing conditions can be found in the proliferation of informal settlements , slum areas , and overcrowding .
As the Covid-19 pandemic has highlighted so clearly , inadequate housing creates a key risk for infection , undermining efforts towards public health , while also failing to support household resilience in the face of emergency , including climate change . Meanwhile , African cities have among the highest urbanisation , population , and household growth rates globally – in some cities as high as 6 %.
Without the supply of adequate , affordable , and sustainable housing at scale , housing backlogs continue to grow alarmingly : Nigeria claims a backlog of 19 million units ; in Kenya , the housing backlog is estimated at about 2 million units , growing at over 350 000 units per annum ; and in South Africa , notwithstanding its ambitious subsidised housing programme , the backlog persists at an estimated 2 million units .
Annual delivery rates of formal , developer-driven housing are nowhere near what is needed to meet current needs , let alone future projections . As a result , most households build and finance their housing independently – and often poorly . Governments continue to struggle to address the challenge and the private sector looks away , towards other opportunities .
And yet , the market opportunity if the housing ecosystem were to function effectively , is tremendous . First , housing stimulates economic growth and job creation and supports enhanced financial intermediation . Second , housing addresses many of the SDGs , driving access to basic services , contributing towards inclusive growth , and supporting the development of a sustainable future . And third , working housing markets improve the efficiencies of resource allocation , reducing dependence on the state and improving household capacity to meet their needs with their own resources – at the centre of this efficiency is finance .
KEY CONSTRAINT TO HOUSING INVESTMENT : LACK OF MARKET INTELLIGENCE
Market intelligence implies accurate and trended market information , a clear indication of risk and return , and track records that prove long-term viability – specifically targeting the opportunities and the challenges that relate to the affordable housing market . Without this information , practitioners move to familiar territory and high margin