Housing Finance in Uganda


This profile is also available in French here.

To download a PDF version of the full 2023 Uganda country profile, click here

A landlocked country in the middle of East Africa, Uganda has witnessed an increase in rural-urban migration with the current urban population growth rate standing at 5.3% a year. The economy shows promising signs of recovery in the aftermath of COVID-19, with GDP growth of 4.6% in 2021/22 financial year. However inflation has risen rapidly, to 7.9% in July 2022, triggering an increase in interest rates: commercial banks announced interest rate changes to an average of 21% for August 2022. The developments in the credit market will certainly affect access to credit for the real estate sector to both supply-side actors such as property developers, and demand-side actors, particularly prospective homeowners.

At the same time, Uganda is experiencing changing weather patterns, decreased water levels, floods and landslides and droughts. Rapid population growth has damaged the environment, particularly as people clear forest cover for settlement. Furthermore, Uganda’s economy is still largely reliant on agriculture, making the country highly vulnerable to the effects of climate change and households vulnerable to food insecurity.

While Uganda’s unemployment rate is one of the lowest in the region at 2.9%, affordability remains a key challenge. Poverty levels remain high at 30%  putting a new two-bedroom house priced at Ush205 million (US$54 719) out of reach of most low income Ugandans.

With respect to housing supply, Uganda’s high population growth rate at 3% coupled with a high urbanisation rate translates into a widening gap between the demand and supply of decent housing units. The current housing deficit is estimated at 2.4 million housing units with the bulk of these falling in the affordable housing segment. On the supply side are private developers delivering housing units of approximately 1 000 units a year. These complement individual households developing their own residential units for owner occupation. Given the housing gap, nearly half (48.3%) of the country’s urban population live in informal settlements.

Yet Uganda’s growing population also presents a unique opportunity for investment in the residential housing marketplace. The current influx of housing units is largely in the middle to high-end space, targeting largely the corporate salaried income earner with access to mortgage facilities from the banking industry. However, the bulk of the 2.4 million housing units needed are in the affordable housing segment with most prospective homeowners being in the low income segment of the population. Additionally, the newly implemented regulations on using retirement benefits to secure a residential mortgage offers an excellent opportunity for both lenders and housing developers to increase the scope of their product offering to this emerging niche.

Finally, Uganda has many renewable energy resources that could be used for energy production, including hydropower, biomass, solar energy, geothermal energy, peat, and wind. Many of these have not yet been fully explored.  The Ugandan government is developing projects with international development organisations to make better use of these renewable energy sources and such projects could present many opportunities.

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

Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2023 edition, which has up-to-date profiles for 55 African countries and territories.

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