Customers find house prices inflated

Dar es Salaam. Buying a house in Tanzania is more expensive than constructing a new one.

That is why a survey has established that out of the 430 respondents, 64 per cent rented houses instead of owning them. They do so while waiting to construct houses of their choice.

Ms Catherine Mwandiga, 36, says she was forced to rent a house after realising that owning a home was more expensive than renting.

She spent more than 11 days to find a house with three rooms which contains water and electricity for at Sh300, 000 a month at Kinondoni.

A house sold at Sh60 million can be constructed at Sh45 million, she says.

The survey by Mikono Speakers International, a multispectral consulting firm in Africa, has also shown that many Tanzanians like renting rather than owning homes.

According to the survey, location is the most important factor when searching for a house for renting, followed by size of the house, cost, neighborhood and payment terms as Ms Mwandiga considered when she was looking for one.

Of the 64 per cent of renting respondents, 95per cent are planning to own homes in the future.

However, respondents point out that houses are too expensive to buy.

The report also reveals that 88 per cent of those planning to own homes prefer building them to buying.

Tanzania Institute of Quantity Surveyors president Samuel Marwa believes people do so because their income flows are irregular.

“Most people have no regular incomes. They construct houses as incomes flow. They lay foundations and then stop until they get more money to go to another phase of construction before finishing,” Mr Marwa told the BusinessWeek

He says many banks are not willing to lend money to poor people.

Tanzania Mortgage Refinance Company CEO Oscar Mgaya told the BusinessWeek that improve access to mortgaging services has increased housing buying.

According to him, the number of mortgage lenders has risen from three in 2009 to 21 in 2015.

“The average mortgage interest rate has fallen from 22 per cent to 16.”

He speaks of the current housing shortage being 3 million units.

He opines that the scramble for houses has raised prices.

However he suggests that alternative building materials be sought to lower costs of house construction.

This comes at a time when the Centre for Affordable Housing Finance in Africa has warned in its report that the cost of constructing a house rose to 30 per cent from 2011 to 2015.

That has sent prices for house buying or renting soaring.

For example, until 2015 the cheapest single room for renting was between Sh30,000 and Sh80 000 and between Sh50 million to Sh65 million for purchasing.

The report also shows that despite the increase in construction costs, people were willing to rent or build houses by their own pockets rather than buying them.