Rationale for the choice of topic2
HOUSE FINANCE GLOBAL VIEW3
CONDITIONS TO FACILITATE LENDING8
DEMAND AND SUPPLY FOR HOUSING8
TANZANIA HOUSING FINANCE THEORY10
Demand for housing finance12
Current Condition in Tanzania12
Access to Housing Finance13
HOUSING POLICY AND HOUSING MARKET14
ACCESS TO HOUSING FINANCE MAIN CHALLENGES18
We examine the extent to which markets enable the provision of housing finance across a wide range of Regions in Tanzania. Housing is a major purchase requiring long-term financing, and the factors that are associated with well functioning housing finance systems are those that enable the provision of long-term finance. Across all countries, controlling for country size, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws), deeper credit information systems, and a more stable macroeconomic environment have deeper housing finance systems. These same factors also help explain the variation in housing finance across emerging market economies. Across developed countries, which tend to have low macroeconomic volatility and relatively extensive credit information systems, variation in the strength of legal rights helps explain the extent of housing finance.
Because of its apparent social and political importance, housing finance for the poor seems an area ripe for policy and regulatory intervention by most governments. However, a survey of both developing and developed nations demonstrates that there is no clear model of an enabling policy and regulatory environment that sufficiently promotes equitable access to housing finance while policing practices. In fact, virtually no common—let alone, “best”—practices exist with regard to the policies and regulations that govern housing finance for the poor. While some regulatory changes in the past decade (particularly with regard to general microfinance fiduciary regulation and land title regularization programs) are beginning to change this, the vast majority of the world’s poor still have limited access to housing finance and their nations’ policy and regulatory environments do little to correct this. The condition holds true for three interconnected reasons. First, these policies cover a wide terrain of public policy (and politics) that includes overall macroeconomic strategy, regulations of banking institutions and products (including microfinance regulations, if they exist), home purchasing and transfer requirements, public housing programs, and even local land use and building codes. All of these governmental decisions affect either the cost of purchasing or improving a home, or of finding appropriate private financing for it. Yet, these are obviously vastly different areas of technical expertise and governance. Second, the resulting likelihood of there being special policies focused on housing finance as a separate and unique social concern are high; in fact, many nations have created special housing finance institutions or policies and regulations that promote, restrict, or protect households from entering into financial relationships relating to homes. Of course, the majority of these special policies and regulations focus on the access to and practice of mortgage finance—a financial product that is unfeasible and impractical for most of the world’s poor. Third, policies and regulations related exclusively to housing finance for the poor are usually non-existent.
We examine to what extent does Housing Finance policies comprehensively help the need. Have the microfinance regulations that have sprouted over the last decade helped or hindered the poor’s use of and...