Tanzania: Director sees rise in housing scarcity

Dar es Salaam. Many Tanzanians have low salaries and are unable to borrow funds for building homes. Generally, lending institutions in Tanzania consider gross incomes of less than Sh750,000 a month as inadequate for mortgaging. However, such amounts are still considered high by Tanzanian standards.Tanzania Bankers Association chairman Lawrence Mafuru told BusinessWeek that the demand for expensive houses was still low as most buyers could not afford them.
“Only few people can afford to pay for newly developed apartments because many people have low incomes,” he said.

He said real estate developers should not blame commercial banks over the high lending rates or reluctance to provide loans for housing schemes because bankers need to establish that potential borrowers have good track records of repaying loans and should demonstrate abilities to honour mortgage agreements.
Many potential borrowers have no credit records for proper assessments. They also have low and sometime unpredictable flows of incomes, and bankers therefore view them as prospective defaulters.
 Other issues that prevent banks from providing mortgage finances  are related to governance.
In some instances, borrowers stop to pay their mortgages because of infrastructural breakdowns in their areas.Hence, lenders are reluctant to lend for purchases in such areas because of potential losses associated with defaults, and also because intermittent service and infrastructural breakdowns diminish property values in the area.
More than 40 commercial banks are operating in Tanzania, but only Commercial Bank of Africa, KCB Bank and Azania Bancorp offer mortgage finance.
The National Housing Corporation (NHC) estimates that Tanzania needs around 200,000 units annually worth Sh19 trillion.