An Investigation Into The Challenges Of “Financialising” Rental Housing In Zambia

“Financialisation of rental housing” is a process to transform rental housing into a financial asset. A number of explanations assert that this process includes the linking of housing to financial markets. Because real estate (including houses) is often financed from borrowed funds, this creates a close relationship between rent, construction costs and bank lending rates. Experiences from a number of African countries, though, shows that this process of “financialising” rental housing has been sluggish. Many still suffer from a pre-1990 state where public housing was the major form of accommodating its citizens. Evidence across Africa shows that financing of housing is unsustainable without private sector involvement, resulting in high deficits. Zambia's housing deficit is currently estimated at 2.8 million units, thus investing the challenges of moving housing from simply being a public good to a financial asset becomes paramount. It thus examines the question: what are the key challenges preventing the transformation of housing into a financial asset? Amongst many challenges, the study finds that there is a financing gap, between rental income and mortgage repayments, in the Zambian housing market. This is preventing the private sector from getting fully involved in the production of houses. This paper used cross-sectional data, collected from financial insertions and real estate firms. The paper points to the need for the reduction of the cost of borrowing and an increase in deposable incomes as the twin measures to propel the transformation of housing into a financial asset.