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Housing is a basic human right, essential for the well-being of all mankind. The 1995 Constitution of the Republic of Uganda, under the General Social and Economic Objectives guarantees to fulfill the fundamental rights of all Ugandans to social justice, economic development, enjoying rights and opportunities and access to clean and safe water, health and decent shelter amongst others. This Housing policy seeks to promote progressive realization of adequate housing for all and is premised on the principle of partnership, involving the Ministry on behalf of Government, the Private sector, Land owner’s, financial institutions, cooperatives and individuals. (See: National Housing Policy)

Access to appropriate, affordable housing is a fundamental human right, which is essential for individual, family and community wellbeing. Uganda has one of the youngest population in Africa and the world! We are witnessing a growing pool of people who cannot access affordable housing, appropriate or otherwise. Recent research indicate that Uganda is characterized by inadequate housing both in quality and quantity across rural and urban areas with a housing deficit of 1.6 million housing units.

Residents of traditional cities like Kampala, Jinja, Mbarara, Mbale, Gulu, Arua etc., live vastly in different housing conditions. With a growing middle class income earners, the demand for decent affordable housing is intense. The urban housing deficit is currently 210,000 housing units. This means it is imperative to increase production of adequate housing for all income groups to over 200,000 housing units per year to meet demand in a foreseeable future (source:NHP).

What is Affordable Housing?

Housing policy is one of the main issues that local governments deal with. It encompasses several overlapping concerns. Providing Framework for making sure that everyone has a decent place to live is an important general priority. Affordable housing therefore refers to housing units that are affordable by that section of society whose income is below the median household income. Housing affordability can be measured by the changing relationships between house prices and rents, and between house prices and incomes. There has been an increase among policy makers in affordable housing as the price of housing has increased dramatically creating a crisis in affordable housing.

Target market for Affordable Housing

Middle income earners: Housing in Uganda affects all income groups and they all demand for decent affordable housing. The demand is higher than the supply. The middle class is comprised of high ranking employees in civil servants, private sector including those in informal sector. Their demand for decent affordable housing as compared to low income earners is distinctively diverse for both rental and owner occupier. It is imperative for property developers to carry out all-encompassing research about housing needs before undertaking projects to avoid mismatch in supply and demand of affordable housing
Low income earners: This is untapped market for real estate and property developers! An orderly development of adequate and affordable housing which is appropriately priced will earn you a fortune! Public servants in junior positions needs and demands for adequate and affordable housing is huge. It is unfortunate that our developers have ignored the low income groups.

How to determine affordability

Affordability of the units is important to you as an investor because it determines profitability and marketability of your investment. As buyer affordability should take into account your annual income vis-à-vis net worth. This will help to determine your financing options inter alia either you need a mortgage (bank loan) that your annual income will support or you are able to do outright purchase through flexible installment payments. Currently, the vendors and bank requirements for all income groups are for salaried customers or business owner with viable collateral.

The Ugandan market has witnessed supply of condominiums and growing housing estates. These have had impact on demand and supply of real estate products. Condominiums developed range from one bedroom to 4 bedroom Apartments. Previously people preferred to buy a plot in a housing estate than buying a highly priced finished house. However with emergence of condominiums, there is has been increased purchases of apartments units (condominiums) and increased owner occupier.

The Banks have revolutionized mortgage lending. Whether it is to purchase, construct, complete, renovate or use one’s property to unlock equity to invest elsewhere, the financing solutions are available at flexible repayment terms, maximum loan tenure of up to 30 years, and affordable interest rates

Supply and demand

In Uganda, the market has been unable to meet the growing demand to supply housing stock at affordable prices. While demand affordable housing, particularly rental housing that is affordable for low and middle income earners, has increased, the supply has not. Potential home buyers are forced to turn to the rental market, which is also under pressure. An inadequate supply of housing stock increases demand for decent and affordable housing.

There are a number of factors that could be attributed for lack of affordable housing among middle-income earners in Uganda including inter alia developers targeting “wealthy and well-connected do class.” However many low-income earners in Uganda are employed in the informal sector, housing finance is largely accessed by wealth private sector and well-connected individuals.

Delivery of affordable residential houses in places like Kampala is being hindered by lack of affordable home financing solutions, high costs of infrastructure, and rising costs of land.

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