In the face of economic growth and rapid urbanization, many African countries are witnessing a significant rise in property prices.
As populations expand and urban centres grow, the demand for housing increases, driving up property values. While these high prices pose challenges for residents, they also create lucrative opportunities for real estate investors.
According to Numbeo, the methodology for the price-to-income ratio involves comparing the median apartment prices to median familial disposable income, expressed as years of income, with lower ratios indicating better affordability.
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Here are the details for the five African countries with the most expensive housing markets
1. Ethiopia: Price-to-Income Ratio of 50.3
Ethiopia’s rapid urbanization in Addis Ababa has led to significant population growth and housing demand. However, the supply of new housing has not kept pace with this demand, driving up prices.
Despite economic growth, income levels remain low for most of the population. Consequently, many residents struggle to afford homes, leading to overcrowded living conditions and a rise in informal settlements. The high cost of housing limits homeownership opportunities and pushes more people into increasingly expensive rental markets.
2. Cameroon: Price-to-Income Ratio of 43.2
Cameroon’s high construction costs and urban migration to cities like Douala and Yaoundé have increased housing demand. Economic instability and low wage growth exacerbate the affordability crisis.
As a result, homeownership remains out of reach for many, leading to reliance on informal housing. High housing costs strain household budgets and affect overall quality of life.
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3. Algeria: Price-to-Income Ratio of 18.7
Algeria’s housing market is the third most expensive, despite government efforts to provide affordable housing, demand still outstrips supply. Economic fluctuations due to the country’s reliance on oil revenues impact housing affordability.
Urban centres like Algiers face high demand for limited housing stock, driving up prices. Middle and lower-income families find it challenging to buy homes, often resulting in extended family living arrangements and limited social mobility.
4. Egypt: Price-to-Income Ratio of 15.5
Egypt’s continuous population growth increases housing demand, particularly in urban centres like Cairo and Alexandria. Despite luxury developments, affordable housing remains scarce.
High inflation rates affect construction costs and housing prices, creating significant barriers to homeownership, especially for the younger population and newlyweds. Rental markets are also expensive, leading to higher living costs.
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5. Morocco: Price-to-Income Ratio of 14.6
Morocco’s housing market in cities like Marrakech and Casablanca attracts foreign investment and tourism, pushing up property prices. While the Moroccan economy is relatively stable, wage growth has not kept pace with housing costs.
Government initiatives to provide affordable housing have not fully addressed the affordability gap. The middle class struggles with housing affordability, leading many to rent rather than buy. High housing costs relative to income lead to financial strain and impact savings and investment capacities.
