Shelter Afrique launches housing affordability calculator
Shelter Afrique in partnership with the Centre for Affordable Housing Finance in Africa (CAHF), has launched a ‘Housing Affordability Calculator’ which will help the Company better address issues of housing affordability in order to improve the viability of affordable housing projects in Africa.
The development institution will address housing challenges by reducing the cost of construction, land and compliance to make infrastructural projects feasible and viable on both the demand and supply sides in the context of African Countries.
The Head of Policy, Research and Partnerships at Shelters Afrique Dr. Muhammad Gambo commented that the Affordability Calculator will have accurate methods for evaluating household affordability and achieving unit costs that meet those affordability challenges.
“Basically, housing affordability is a function of the purchase price, finance and the cost of living. However, if household affordability is not accurately gauged by public or private sector developers, then there is a serious risk that there will be insufficient effective demand by households to purchase or rent the houses produced. Thus, the housing affordability calculator is vital for Shelter Afrique in evaluating housing project proposals submitted, with respect to whether the units proposed are likely to be affordable to a low-income target market in that location,” said Dr. Gambo.
He also noted that the affordability calculator will assist other stakeholders in the built environment industry to better address issues of housing affordability and to improve the targeting and viability of their affordable housing projects.
Dr. Gambo observed that poor affordability targeting could pressure government systems to provide further subsidy and impose target price that cannot be practicably delivered by a developer.
“In most countries in Africa, even the cheapest newly-built house is still not affordable to the majority of the urban population leading to high vacancy rates as we’ve seen in some countries such as Nigeria and Kenya. Developer-built housing typically targets the higher end, and is rarely delivered at scale. But even a USD20 000 house is unaffordable for the majority – and these are only available in limited projects,” said Dr. Gambo.
The calculator requires the user to input a household’s monthly income; distance from the city centre; country of residence; and the local currency or US Dollar as data points.
It will then apply background data and assumptions based on the prevailing mortgage terms in individual countries, percentage of monthly household income spent on transport based on distance of house from city centre, and percentage of monthly household income spent on transport and housing for each income band.