Prospects of the Property Market in Zambia

The cheapest newly- built house in Zambia, built by a formal developer or contractor, was estimated at $ 70,000 in 2012. In 2013, the estimated price fell marginally to $68,363. In about the same period interest rate tumbled from 20.06% in 2009 to 12.14% in 2012, inflation subsided from a doubt-digit of 13.4% in 2009 to a low of 6.4% in 2011 and GDP budding up from 6.04% to 7.3% in 2012. All these positive macroeconomic changes make one to wonder about the future of the housing market in Zambia. Zambia is richly endowed with scenic sites, culture, natural mineral deposits and presents vast opportunities in trade and commerce because of growing incomes and size of the middle class population, which may explain why Zambia has consistently remained attractive to foreign investors and international capital inflows.

Unfortunately, Zambia has had its share of political turmoil and economic mismanagement which have often translated into very unpredictable levels of interest rates, inflation rates and exchange rates in the past. Regrettably, these three variables combine in such a way that scares investors from making long-term investments into markets such as housing. As a result, the cost of a house in Lusaka is one of the highest in Africa which greatly impacts the affordability of the population for housing. In fact, based on the income distribution, as presented by World Bank’s poverty survey, only less than 1% of the population can afford the cheapest formal house, which is currently estimated at about $68,363 (Housing Finance in Africa Yearbook, 2013).

Does this imply that the urban population is too poor or is it that houses are too expensive? In other countries, the cheapest newly built house is much less expensive – hovering around US$30,000; therefore, a peer-to-peer comparison shows that the house prices in Zambia are extremely high. Secondly, even though the population in cities may not be very rich but comparing to other African states, there is no significant difference. These indicate that the major impediment to the Zambian housing market could be the high prices which according to the economic theory are driven by limited supply of developed units, cost of capital (interest rates) and the general cost of living (inflation rates). These factors would shape the supply-side of the market since, for instance, high interest rates would discourage borrowing for housing construction and high inflation would force investors to ask for higher returns and these would all translate into less supply or costly house production.

But recent developments on the political front seem to have spurred favourable dynamics into the money market which seem to be slowly changing the macroeconomic equations in favour of income growth and investments. According to the African Development Bank’s economic outlook on Zambia, despite high youth unemployment and slow progress in poverty reduction, the Zambian economy remains favourable and is underpinned by robust growth and single-digit inflation. In 2012, the bank had projected the economy to grow by 6.9%, but instead, it grew by 7.3% and currently expects an economic growth of 7.3% in 2013 and inflation to remain in the single-digit realm, at 8.5%.  Another optimistic indicator is provided by the Bank of Zambia’s (BoZ) Governor, Dr. Michael Gondwe, when he argued that Zambia’s economic prospects for the second half of 2013 have remained favourable and are being driven by continued investments in mining, manufacturing, tourism, communication and infrastructure. Accordingly, the domestic credit which included foreign currency loans, construction finance and mortgage loans had risen by 32.6% to K26, 164.7 million from K19, 726.8 million in only six months, from December 2012 to June 2013.

So, what is the likely future of the property market in Zambia? It seems obvious but before making hasty opinion, one should understand that property markets are unique and may not respond as fast as other markets would do. For instance, houses, which are the products in the housing market, are highly heterogeneous (different from each other), restricted to a location, complex, durable, costly and immovable, thereby attracting less attention than other goods or investment vehicles (Bramley, Leishman, & Watkins, 2008; Min & Quigley, 2006; Pozo, 2009). In microeconomic terms, such markets are said to be imperfect which implies that the suppliers’ and buyers’ responses to market changes may be slightly sluggish. Therefore, in my own opinion, we would expect piecemeal changes in prices and demand in the short-term.  But in five years’ time, the supressed demand for housing will have an increasing impact on the market as the middle class takes on new jobs and their disposable income grows.

The future is certainly bright. As macroeconomic and monetary policy stabilizes, we expect a reduction in the cost of capital and debt in general; this could then translate into lower cost of house production and mortgage finance. Cheaper capital and higher returns would attract more investors into the market because of existence of what industrial economists call super profits. Increased competition would lead to lower prices; this would attract more buyers who may consider financing their house purchases using mortgage loans. If this happens, then competition amongst banks may encourage more people to borrow and buy houses which would increase the turnover of developers and instigate more constructions.  However, since the housing market has a greater impact on the cost of living, price level and consumption, the Central Bank may still step in to regulate this process to avoid over heating of the economy. Therefore, with changes in the affordability (due to positive changes in the incomes), stability of the business environment, and given the existing need for new housing units, especially the affordable housing, the government is better placed to sell and implement policies and incentives that could attract investments into the affordable market segment.


Bramley, G., Leishman, C., & Watkins, D. (2008). Understanding Neighbourhood Housing Markets: Regional Context, Disequilibrium, Sub-markets and Supply. Housing Studies, 23(2), 179-212.

Min, H., & Quigley, J. M. (2006). Economic Fundamentals in Local Housing Markets: Evidence from U.S. Metropolitan Regions. Journal of Regional Science, 46(3), 425-453.

Pozo, A. G. (2009). A Nested Housing Market Structure: Additional Evidence. Housing Studies, 24(3), 373-395.

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4 responses to “Prospects of the Property Market in Zambia

  1. how are residental land developments prospects in Zambia

    1. Hi Aubrey. I’m afraid I don’t have much information about residential land development in Zambia. However, take a look at this report we released last year on Zambia’s housing finance sector. That might be helpful. We also did an analysis of survey data a few years ago on access to housing finance in Zambia. Lastly, we did a study on the housing finance needs of households in informal settlements in Zambia.

  2. Godfrey Murewi on 1st July 2015 at 12:21 pm

    When you say the cheapest housing unit in Zambia is around $68 000, what type unit are we talking about here i.e size in sq metres etc.and is this a general standard high density unit.

    1. Centre for Affordable Housing Finance in Africa on 18th November 2016 at 4:56 pm

      Dear Godfrey Murewi, Please see for more updated information or our Housing Finance in Africa Yearbook, 2016 on The house price has been updated and the size of this house is provided as well.