Housing Finance in Uganda

Overview

This profile is also available in French here.

To download a PDF version of the full 2021 Uganda country profile, click here.

Uganda’s population growth rate is 3.5%. At 5.99%, Uganda’s urbanisation rate is high and this is complemented by high population growth. This has resulted in 48.3% of the country’s urban population living in the ever-growing informal settlements. Approximately 94.5% of the population live in informal settlements and do not have access to basic sanitation services. Over the last financial year ending June 2021, Uganda’s economy has grown by 0.3% to 3.3% from 3.0% recorded in the 2019/2020 financial year. This growth pattern is owing to expansions in household sector demand, supported by a strategy of monetary easing pursued by the monetary authorities after the earlier slump in growth attributed to COVID-19 and lockdown measures on the economy. However notably, the housing sector continues to operate, unabated by the lockdown.

Other sectors of the economy did not do fortunately as restrictions in the business environment translated into a reduction of growth in private sector credit to 6.8% for 2020/2021. This is a significant reduction from a year-on-year average growth of 12% for the previous three years to June 2020. The slow Growth in borrowing or lending is expected to continue over the next financial year to June 2022 on account of the low levels of economic activity after a second lockdown of the economy over the period 18 June to 29 July 2021.

On the market side, Uganda’s general price levels have remained relatively low and stable with headline and core inflation rates subdued at an average of 2.4%and 3.4% respectively over the one-year period to July 2021. This is well-aligned within the 5% inflation rate target pursued by the monetary authorities in the East African regional economies. The low inflation rate has mainly been due to lower food and utility prices coupled with low household demand for the bulk of goods and services. Bank of Uganda’s projections indicate that this trend will change, with inflation forecasts pointing to a gradual rise throughout the year on account of the pandemic containment measures, but remaining within the 5%target range in the medium term.

On the property market side, the marginal increment in general prices translated into a relatively higher rise in property prices, with implications for housing affordability. The Residential Property Price Index (RPPI) for the Greater Kampala Metropolitan Area rose 5.6% in the the2020/21 financial year compared to the previous financial year. The increase is largely attributed to increments in property prices across Uganda’s central region, mainly because of a high urbanisation rate of 5.2 %. The rise in the RPPI negatively affects housing affordability even in the restricted economic environment. This is because housing became a crucial need for the urban working population when the general population was confined in their homes during the COVID-19 lockdown periods. Homeownership has worked positively in boosting resilience to the effects of the pandemic as homeowners are spared the rent burden even through periods of restricted economic activity and low income. The property also works as collateral for the owner to access credit.


Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2021 edition, which has up-to-date profiles for 55 African countries

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