Housing Finance in Ethiopia

Overview

This profile is also available in French here.

To download a pdf version of the full 2022 Ethiopia country profile, click here.

According to 2015 estimates, Ethiopia will have approximately 4 million new urban households by 2027 and 9.7 million by 2037. There will be a demand for 471 000 urban houses per year from 2015 to 2025 and for 486 000 houses per year from 2025 to 2035. However, the housing finance system in Ethiopia is underdeveloped. In terms of access to finance, more than half of the housing market is financed informally through relatives, friends, and savings groups, and only 23% through mortgages.

Ethiopia faces the challenge of not being able to supply sufficient new affordable housing and upgrade existing stock to meet the demand required annually. As a result of the limited access to decent and affordable housing, informal settlements have increased in the main city.

The real estate sector has contributed 12.5% to GDP growth in the past 10 years. The growth has largely been attributed to an 8.9% expansion in real estate and construction. On the supply side, adequate developer financing is lacking. The private sector is neglected, with all efforts devoted to the government housing program. On the demand side, demand for formal housing is high, with the government IHDP units fetching up to five times more than the original auction offer.

Changing working patterns and a growing labour force provide Ethiopia with an opportunity for urban growth. It is estimated that Ethiopian cities contribute 38% of Ethiopia’s GDP. On the climate change front, Ethiopia has yet to fully embrace green building practises due to other social and economic challenges hindering the provision of affordable housing.

Find out more information on the housing finance sector of Ethiopia, including key stakeholders, important policies, and housing affordability:


Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2022 edition, which has up-to-date profiles for 55 African countries.

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