Housing and the Economy

Residential property is the largest and most differentiated asset within any country, and a significant part of a nation’s economy, especially insofar as it relates to household wealth, livelihoods, and the prospect of inclusive growth.  As the property market grows and develops, housing can be an instrument of economic transformation, with property values growing faster than inflation and offering leapfrog opportunities to lower income households as they benefit from the appreciation of their housing asset.  This creates demand for further housing services – home improvements, extensions, the construction of new housing – and in this, housing is significant as a growth sector for the economy.  With this, further opportunities to leverage property with finance arise, supporting the development of small businesses, so important in the context of low employment. At the same time, this activity contributes to a growing revenue base for the government at the municipal level, and improves the city’s ability to invest in further growth and deliver appropriate services to the breadth of its population.

See our blog on Housing as an Asset

How do we measure asset performance, however?

CAHF’s series of “Housing Economic Value Chain” studies are ground-breaking in their approaches, venturing into territories where real information is scarce, and data to build that information severely lacking. While we don’t claim to have definitively answered these questions, we have come a long way to develop replicable approaches that give us more certainty than ever before. And this, we hope, will be the foundation on which better and more accurate information will grow across the African continent.

To begin, we produced five blogs or articles that consider the role of residential construction and residential rental in Africa’s developing economies, as well as on comparing the costs of producing affordable residential accommodation in fifteen African countries:

1. What Role does Housing Play in African Economies?
2. The Story of Housing and the Economy: Decoding the Housing Construction and Housing Rental Value Chains
3. The Story of Housing and the Economy: Exploring South Africa’s Housing Value Chains
4. Understanding the Upstream Economic Impacts of South Africa’s Housing Economy
5. Quantifying South Africa’s Housing Economic Value Chain in 2017

In the first  report of the series, we  describe, quantify and compare the housing economic value chains of South Africa, Rwanda, Kenya and Nigeria. The report analyses the impact that housing construction and housing rental have on developing economies, and which sectors of the national economy are most impacted by these activities. Separate country reports focus exclusively on South Africa, Kenya,  Rwanda , Tanzania, Nigeria, Uganda, Côte d’Ivoire and Ghana.

In South Africa, we went one step further to analyse the impact of government’s subsidised housing programme on the housing construction and housing rental value chains.

A second multi-country report presents the findings of a unique housing cost benchmarking methodology developed by CAHF, analysing housing costs in fifteen African countries. In addition, two dashboards provide an opportunity to view and engage with the data:

1. Benchmarking Housing Construction Costs in Africa
2. Down to Brick Level: Benchmarking Housing Construction Costs in Africa

In addition, we will share with you how these studies – one viewing housing from a macro-economic viewpoint, and the other from a micro-economic viewpoint, start to combine to build a better picture of the role of housing in developing economies. Check back for additional reports as we undertake this housing economic value chain analysis in Ghana, Uganda, and Cote d’Ivoire.