The Anatomy of Egyptian Housing System: How Far Can the Mortgage Finance System Reach?

As Egypt enters the 21st century, affordability in the housing market continues to be one of the most important challenges that Egyptian policymakers must address. Egypt has very striking features, including high level of poverty and consequently low housing affordability by international standards. Despite the recent rapid development of housing policy and institutions, mortgage finance still shows a very limited reach since the passage of the Mortgage Law in 2001. This actually reflects the small numbers who can afford mortgages, the high cost of houses in relation to incomes and the informal nature of most title deeds in the country to mention but a few. On the other hand, contemporary housing supply policies are geared towards moving away the state from the social responsibility of the direct provision of housing. Thus, the reality of the Egyptian housing system today means that market based approaches are required to increase the provision of affordable and adequate housing at the lower-income end of the market. So, it is timely and important to assess the effectiveness of the current housing system to identify its reach and the limit of that reach. This paper sets the issue in its wider context to elaborate on the main hurdles in the current system. It then explores the relative importance of the purposes of mortgage finance in Egypt. Finally, the paper outlines a forward-looking agenda for further research to examine what needs to be done to close the gap on what would be a more comprehensive housing system.