Cost to build a house increase by 30% despite fall in cement prices
The cost of building a house has increased by ±30% in four years despite a drop in cement prices, a new study shows. The report by the Centre for Affordable Housing Finance (CAHF) shows that building a two-bedroom housing unit with 65 m2 cost $16,130 in 2011 but went up to $20,992 in 2015.
Established in 2014, CAHF’s vision is to enable affordable housing finance system in countries throughout Africa, where governments, business, and advocates work together to provide a wide range of housing options accessible to all. Experts say the trend is mainly influenced by high costs of several other construction materials which are subject to taxation.The report shows that the cost of a 50-kg bag of cement has fallen from $9 in 2011 to $7 in 2015, due to an increased number of local producers.
Until 2011, Tanzania was home to three cement manufacturers namely Tanzania Portland Cement (Twiga), Tanga Cement (Simba) and Mbeya Cement (Tembo). To date, there are eight factories: Athi Rivers Mining’s (ARM) (Rhino cement), Dangote Cement, Camel Cement, Lake Cement, and Lee Building Materials.
However, the cost of cement in Tanzania is said to be higher than the average price of $5.6 which applies within the SADC region. The Watumishi Housing Company (WHC) chief finance and administration officer Paskali Masawe said: “Cement is currently cheap because it is produced locally but most of the other construction materials are imported.”
Masawe said the cost may have been escalated by VAT as Tanzania charges VAT on both the building materials and the housing. The government said it was working on the possibility to waive VAT on low-cost housing to make it more affordable to ordinary Tanzanians but the plan has not yet matured. The report also indicates that Tanzania’s mortgage market is among the smallest in the East African region and interest rates of between 18 and 22% are charged on long-term financing.