Housing Finance and Markets Dynamics in Tanzania

An Analysis of Cross-sector Linkages

  • Vianey John Mushi School of Earth Science, Real Estate, Business and Informatics, Ardhi University, Tanzania.
Keywords: Housing Finance, Mortgage, Housing Markets, Co-integration, Causality


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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How to Cite
Mushi, V. J. (2020). Housing Finance and Markets Dynamics in Tanzania: An Analysis of Cross-sector Linkages . Journal of African Real Estate Research, 5(1), 16-31. https://doi.org/10.15641/jarer.v5i1.800
Research Articles