Delivering Mortgage Finance Services in Tanzania - Spotlights on Housing Boom and Burst

Komu, Felician

doi:10.15396/afres2015_123

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“…(2003) and Kironde (2003), provide a detailed discussion on remedies required in the legal and regulatory frameworks in order for the mortgage sector in Tanzania to function properly. The one notable exception is Komu (2015) who, theoretically, argues that mortgage credit flow appeared to drive housing construction output and price bubbles since 2008. That said, knowledge on whether the underdevelopment of the mortgage sector is a symptom or consequence of a limited relationship between mortgage credit flow and housing prices is not well known.…”

Section: Introductionmentioning

confidence: 99%

Housing Finance and Markets Dynamics in Tanzania

Mushi

2020

JARER

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This study examines whether feedback from housing price shocks factored into the availability of mortgage credit in Tanzania between 2008 and 2018. This was done by estimating a Vector Error Correction Model (VECM) with mortgage financing and using three measures of house pricing trends in the luxury, mid-end and economy sub-markets as dependent variables. Results showed that mortgage credit expansion is related to housing price growth in the long-run, but the impact mostly ran from housing price shocks to mortgage growth. In the short-term, changes in price for luxury houses led to a mortgage growth in the first quarter after the shocks, which in turn stimulated changes in housing prices. However, variations on mortgage credit flows had a more significant short-term impact on prices of housing units than it did for houses priced on mortgage credit. The dynamic response between mortgage credit flow and housing prices disappeared when housing price indicators for the economy and mid-end sub-markets were used in the analysis. In addition, both mortgage credit and housing markets were highly persistent, but the effect of previous shocks lasted longer in the mortgage lending process. The paper concludes that the substantial increase in housing prices might be a major concern for policymakers, in particular, because it foreshadows a mortgage crisis.

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Section: Introductionmentioning

confidence: 99%

Housing Finance and Markets Dynamics in Tanzania

Mushi

2020

JARER

View full text Add to dashboard Cite

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Delivering Mortgage Finance Services in Tanzania - Spotlights on Housing Boom and Burst

Cited by 1 publication

References 0 publications

Housing Finance and Markets Dynamics in Tanzania

Housing Finance and Markets Dynamics in Tanzania

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