Shelter Afrique, the Pan-African mortgage lender has developed a ‘Housing Affordability Calculator’ to vet proposals by developers pitching for affordable housing financing.
The calculator requires the user to input the household’s monthly income, distance from the city centre, country of residence, and the local currency or US dollar to gauge affordability.
The calculator then applies background data and assumptions based on the prevailing mortgage terms in individual countries, percentage of monthly household income spent on transport based on the distance of the house from the city centre, and rate of monthly household income spent on transportation and housing for each income band.
“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,” Head of Policy, Research and Partnerships at Shelter Afrique Dr Muhammad Gambo.
He further added that currently, developers claim they are setting up affordable units but price them expensively creating a risk of slow uptake of completed projects.
The housing affordability calculator, which was developed in partnership with the Center for Affordable Housing Finance in Africa (CAHF), also seeks to enhance understanding of housing affordability as it pertains to the demand and supply sides in the context of African countries.
The calculator will put pressure on developers whose price range are still very high despite claiming to put up affordable houses.
“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,” Dr Muhammad Gambo.
Affordable housing is a profit-making venture for investors, especially after the government gave incentives such as tax rebates and infrastructure cost subsidies in a bid to encourage private sector involvement in attaining half a million housing units.
Read also; Shelter Afrique Receives $1.7 Million Investment from DRC.
