According to Janet Viveiros and Lisa Sturtevant of the US based Centre for Housing Policy, they give up due to the fact that they don’t have savings as they spend more than 50 percent of the household’s monthly income on housing costs.
Both experts believe that spending a disproportionate share of income on housing stifles economic growth as such households restrict their spending not only on other important necessities, but also on non-essential goods and services.
And this is why, media reports indicate that many Tanzanian adults are severely burdened by housing costs as they spend more than half of their incomes on housing costs.
Such figures demonstrate the rapidly growing need for affordable housing in the country.
“Affordable housing has to be what people and society can pay for but it also has to be housing that is adequate and acceptable,” says Amina Abubakar, housing expert with Jest Real Estate Consultants.”
“These are the working poor whom you see every day, those who serve us in restaurants, etc. Those who are able to find homes that are affordable often find themselves making difficult tradeoffs; paying rent often comes at the forfeiture of other essentials such as food, childcare, transportation and medical expenses,” she added.
The expert considers land issue as one of the constraints to affordable housing as it adds considerably to the cost of housing, largely because a limited supply leads to speculative land holding, where investors buy land cheaply and keep it off the market until its value increases.
“There can't be affordable housing unless the government sees affordable housing as a necessary and positive force driving urban development.
In fact decent, affordable housing is fundamental to the health and well-being of people and to the smooth functioning of the country’s economy,” she observed.
For David Mkumbo, an independent consultant sees underemployed, unemployed and the low- and moderate- income households as among the most at risk for severe housing cost burdens.
“Unless there is an increased pace of housing developments, rents are going to continue to rise, and the prices of those units meant for-sale probably will go up and thus put the underemployed, unemployed and the low- and moderate-income households out of homeownership,” he detailed.
This is to say, affordable housing is in short supply, with the current annual demand of 200,000 plots and a 3 million housing gap, the country faces a huge hurdle but equally presents immense opportunities which some of the prudent investors have tackled.
“However,” said Mkumbo “…to be affordable, housing must not consume so much of the household budget that there is not enough left to pay for other essential items such as food or health care.”
According to him, most often, an affordable cost of housing is defined as no more than a certain percentage of pre- or post-tax income. “Typically 30 percent of income is regarded as a reasonable limit.”
Moreover, McKinsey Global Institute (MGI), a business and economics research arm of McKinsey & Company discloses in its research dubbed ‘A blueprint for Addressing the Global Affordable Housing Challenge,’ that official definitions of affordability have varied significantly over time and between nations and can even vary within a region.
In highly productive, high-cost cities, the households that command top salaries can spend 40 to 50 percent of income on housing and still have resources for all their other needs; in a low-income city, 30 percent might be a stretch, even for a mediam-income household.
Part of the research reads: “Nevertheless, the 30 percent rule of the thumb allows an insightful statistical description of the impact of housing costs in a city.
Affordable housing is a challenge that has frustrated many,”Johnson Byalugaba, a student with Ardhi University told ‘Property Watch’ that an enormous force holding back meaningful progress in affordable housing is a series of market inefficiencies that unnecessarily raise the cost of delivering affordable housing.
According to him, such failures range from land markets that do not respond in expected ways to changes in pricing and demand to construction industries in many nations that have not been compelled to by competition to adopt more productive methods.
“This is why you find that the so called affordable housing are out of reach, for instance, if you are to buy a house and you’ve got cash, the minimum price would range between 50m/- to 70m/-.
And if you are to pay over 10 to15 years the amount may double.Now tell me, who among us has such an amount of money,” he questioned.
Byalugaba is of the view that National Housing Corporation (NHC), Tanzania Building Agency (TBA), Watumishi Housing Company (WHC), as well as the pension funds, would have easily helped the majority Tanzanians to own houses.
“It is unfortunate that most of these institutions’ affordable housing schemes do don’t promote affordability … secure and suitable housing is a vital determinant of wellbeing.
But, based on the evidence, we don’t enjoy the security and comfort of affordability as the housing market is not meeting the needs of all Tanzanians,” he clarified.
He adds: “I think this is why the Minister for Lands, Housing and Human Settlements Development, William Lukuvi has stopped the NHC to increase rent as well as constructing luxury satellite cities in the name of affordable housing which are occupied by the so called first class citizens - the elite.”
According to Byalugaba, lack of available housing options, combined with limited income and minimal access to home finance for low income borrowers, means that millions of Tanzania households will live in cramped, poorly constructed houses which will incur them with more of their incomes.
It is said that to address this housing insecurity crisis requires a widespread and comprehensive change of the affordable housing system so that communities everywhere can become vital and strong, giving residents the chance to break out of poverty.