High housing costs result in overcrowding

03Jul 2017
Muharram Macatta
The Guardian
High housing costs result in overcrowding

Today, the national population is estimated to be about 50 million with the urban population constituting to about 30 percent.

A crowded street in Dar es Salaam City.

Today, the national population is estimated to be about 50 million with the urban population constituting to about 30 percent. The phenomenal rise in population, number and size of our cities over the past few years have manifested in the acute shortage of dwelling units which resulted in overcrowding. 

High rents also result in poor urban living conditions, and low infrastructure services and indeed high crime rates. The rate of urbanization in Tanzania has witnessed tremendous increase in the last five decades.

Various programs have been implemented to address housing problems. Despite all these interventions, Tanzania's housing problems still remain intractable. 

Urbanization has resulted in people increasingly living in slums and squatter settlements and has deteriorated housing conditions of the economically weaker sections of the society. 

Unfortunately, the number of units needed is unknown unless an exclusive survey is undertaken to find out the truth of this burning issue.

Housing in Dar es Salaam has long been more expensive than most of the rest of the country. Beginning in about 1970, however, the gap between Dar es Salaam City’s home prices and those in the rest of the country started to widen. 

Between 1970 and 1980, Dar es Salaam commercial city home prices went from 30 percent above the country’s levels to more than 80 percent higher. This trend has continued. 

Today, an average Dar es Salaam home costs 450,000,000/- to almost a billion/- about two–and–a–half times the average national home price (180,000,000/-). Also, Dar es Salaam City’s average monthly rent is about 300,000/-; 50 percent higher than the rest of the country (150,000/- per month).

In recent decades, the state has approached the problem of housing affordability for low–income Tanzanians and those with unmet housing needs primarily by subsidizing the construction of affordable housing through bond funds, tax credits, and other resources. 

Because these programs have historically accounted for only a small share of all new housing built each year, they alone could not meet the housing needs. 

For this reason, we advise the legislature to consider how targeted programs that assist those with limited access to market rate housing could supplement broader changes that facilitate more private housing construction.

Dar es Salaam is a desirable place to live. Yet not enough housing exists in the state’s major coastal communities to accommodate all of the households that want to live there. 

In these areas, community resistance to housing, environmental policies, lack of fiscal incentives for local governments to approve housing, and limited land constrains new housing construction. 

A shortage of housing along Dar es Salaam’s coast means households wishing to live there compete for limited housing. This competition bids up home prices and rents. 

Some people who find Tanzania’s coast unaffordable turn instead to Tanzania’s inland communities, causing prices there to rise as well. In addition to a shortage of housing, high land and construction costs also play some role in high housing prices.

The legislature should change policies to facilitate significantly more private home and apartment building in Tanzania’s coastal urban areas and the hinterland. 

Though the exact number of new housing units Tanzania needs to build is uncertain, the general magnitude is enormous. On top of the 100,000 to 140,000 housing units Tanzania is expected to build each year. 

The state probably would have to build as many as 100,000 additional units annually—almost exclusively in its coastal communities—to seriously mitigate its problems with housing affordability. 

Facilitating additional housing of this magnitude will be extremely difficult. It could place strains on the state’s infrastructure and natural resources and alter the prized character of Tanzania’s coastal communities. 

It also would require the state to make changes to a broad range of policies that affect housing supply directly or indirectly—including policies that have been fundamental tenets of Tanzania government for many years.

Living in decent, affordable, and reasonably located housing is one of the most important determinants of well–being for every Tanzanian. More than just basic shelter, housing affects our lives in other important ways, determining our access to work, education, recreation, and shopping. 

The cost and availability of housing also matters for the state’s economy, affecting the ability of businesses and other employers to hire and retain qualified workers and influencing their decisions about whether to locate, expand, or remain in Dar es Salaam.

Unfortunately, housing in Dar es Salaam is extremely expensive. Many households struggle to find housing that is affordable and meets their needs. Amid this challenge, many households make serious trade–offs in order to live here. 

Amid high housing costs, many households make serious trade–offs to afford living here. Households with low incomes, in particular, spend much more of their income on housing. 

High home prices here also push homeownership out of reach for coastal communities’ commute 10 percent further each day than commuters elsewhere, largely because limited housing options exist near major job centers. 

In most instances, these trade–offs are particularly challenging for households with low incomes. Notable and widespread trade–offs include (1) spending a greater share of their income on housing, (2) postponing or foregoing homeownership, (3) living in more crowded housing, (4) commuting further to work each day, and (5) in some cases, choosing to work and live elsewhere.

Tanzanians are also four times more likely to live in crowded housing. And, finally, the state’s high housing costs make Tanzania a less attractive place to call home, making it more difficult for companies to hire and retain qualified employees, likely preventing the state’s economy from meeting its full potential.

Because of the important role housing plays in the lives of Tanzanians and other citizens, the state’s high housing costs are a major ongoing concern for state and local policy makers. 

Looking forward, there are many reasons to think this dynamic will continue. Many of the primary factors that make Dar es Salaam desirable—moderate weather, natural beauty, and coastal proximity of its major metros—are ongoing. 

At the same time, we see no signs that coastal community resistance to new housing construction is abating. In addition, many state and local policies that have slowed or stopped development in recent decades remain in effect today. 

We therefore think that, in the absence of major policy changes, the city’s trend of rapidly rising housing costs is very likely to continue in the future. 

Our analysis suggests that building substantially more housing in coastal urban areas—possibly as much as 100,000 additional units each year—could prevent Dar es Salaam’s housing costs from continuing to grow faster than the other similar growing cities.  In our view, demand for housing in the commercial city substantially exceeds supply should inform discussions and decision making regarding state and local government housing policies.

We do, however, recognize that any attempt to estimate the state’s future housing needs faces significant uncertainties. Unforeseeable changes in demographics, economic conditions, or technology could shift dramatically the dynamics of the commercial city’s housing markets.  

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