Housing Mortgage Financing in Africa 2010-2018

Context and background The importance of a well-functioning mortgage market cannot be underestimated when it comes to addressing the long-term growth of demand for housing in Africa. The paper works on the following hypotheses: [i]urbanization and the effectiveness of the deed registry have a positive impact on mortgage volume; [ii] poverty and mortgage interest rates have a negative impact on mortgage volume Goal and Objectives: The objective of this paper is to examine the causal relationship between housing mortgage volume and macroeconomics factors as well as institutional characteristics. The main contribution is that I am utilizing a data not only on mortgage depth, GDP, population growth, urbanization and construction investment as well as mortgage interest rate and mortgage term. I am also using information about deed registry, how many properties that have a deed, how long time it takes to register a property and the cost to do it. Methodology: The data used is a panel data set consisting of around 30 countries across Africa over the period 2010-2018. The data comes from Center for Affordable Housing in Africa. The estimation strategy used is a simple regression model. Results: The results indicate that effectiveness of deed registry with coefficient of 4.4 is the major macroeconomic factor explaining total mortgage debt. However, effectiveness of deed registry alone cannot only explain housing mortgage debt. Other important factors explaining the variation in mortgage debt are mortgage interest -0.67 and unemployment 0.54. What policy implications can be drawn from these results? Besides a stable long-term sustainable economic growth, there is need of a housing policy that specifically addressing the housing mortgage market. Here is a deed registry of highest importance.