Poor finance dents property ownership

Lack of access to housing finance remains a major obstacle to home ownership in Malawi, a country which has 59 percent of its houses classified as sub-standard, according to a report.

The Africa Housing Finance Yearbook 2022 report indicates that while the cost of the cheapest 40 square metres newly built house in an urban area valued by the Ministry of Lands is K10 million, access to mortgages, a long-term loan for buying a house, is affected by the increase in the interest rates, now hovering at around 33.5 percent.

The report said this is worsened by high levels of financial exclusion, with 60 percent of adults lacking access to formal financial services while 14 percent of adults actively use formal financial services.

For minimum wage earners, owning a house is a far-fetched dream as at 2022, the lowest paid civil servant was earning K1.81 million per annum, according to the report.

Reads the report in part: “The minimum wage earners can afford rentals in the current market, but can hardly build a permanent house in the urban areas.

“Economic stagnation and the devaluation of the kwacha have increased the disposal of residential houses by owners at lower rates.”

The report further said the increase in the cost of building materials has also negatively affected housing supply in the major cities of Lilongwe, Mzuzu, Zomba and Blantyre.

It said due to scarcity of foreign exchange to enable international trade in the country, the prices of most construction materials that are imported are likely to remain unstable despite the government’s interventions.

Between January 2023 and August 2023, for instance, cement prices increased by 20 percent from about K12 500 to K20 000, according to a Business News snap survey.

During the review period, monthly rentals ranged between K50 000 and K60 000 for a house measuring an average of 40 square metres, according to Africa Housing Finance Yearbook 2022.

In formal high and medium density areas, monthly rentals for a house range from K1 050 to K3 151 per square metre while in low density areas, rentals range from K 3 151 to K5 252 per square metre.

Speaking in an interview yesterday, Consumers Association of Malawi executive director John Kapito said more low-income wage earners are building sub-standard houses due to lack of affordable housing finance.

In an interview yesterday, Association of Real Estate Agents in Malawi president Ken Msonda said government does not have a policy to help middle and low class citizens to won a  house as is the case in other Southern Africa Development Community countries.

Experts say the Housing Policy of 2000 does not adequately address issues arising from other national policies such as the National Land Policy (2002), among others