The Myth of Skyrocketing Prices of Homes in Lilongwe

Following today's (06-06-2009) article in the Malawi News by Stanley Kenani on Rentals in Lilongwe i felt it needed a proper response. The Myth being propagated by Kenani is that rentals in Lilongwe are that high because of the crooked Estate Agents. I would like to be the myth buster in this case. Rentals and the prices of houses have significantly gone up (more than trippled in some cases) because the city has seen a substantial growth in its population. Unfortunately the housing stock has barely grown. The very few houses mainly constructed in the 1970s and 80s are being chased by the multitude of people from all classes. This unfortunately has led to the skyrocketing of prices especially for the rich and middle income from the MK30-40,000 rent for a 3 Bedroom MES in year 2001-3 and to now where a similar house is now going for +-MK100,000. During the same period a house in Area 10/12 was for sale at around MK1,500,000 and now the same houses are for sale for at least MK14,000,000. A 3 Bedroomed house in Areas like 18 and Falls were going for MK12-15,000and is currently going for at least MK50,000. Similar houses in the same neighbourhood were for sale for around MK700,000 during the same period are now selling for at least MK6,000,000. This also applies to the low income (Area 25, Biwi etc) areas and the informal settlements (Mtandile, Chinsapo etc) where the poor generally reside.

Thus Estate Agents have no role at all to play in the increased prices as this has been caused by Supply and after analysing the corresponding rentals in Blantyre one is left with the view that Blantyre has an adequate supply of housing especially for the middle income. A house in Nyambadwe is currently going for +-MK50,000 per month whilst the same house in a similar neighbourhood in Lilongwe (Area 10) is at +-MK100,000. The article further recommends the Government to regulate rentals, i believe that this will be a step in the wrong direction that will yield no results at all as the problem is not the price of the good but the supply and demand. As the government will never be able to stem demand for housing (with urbanisation rates currently at unprecedented rates) it can only influence supply. This can only be done through a progressive housing policy that allows the private sector and communities to drive the process.

As long as there is a mismacth between housing aspirations and the administration this match will take forever to be realised. The supply of land is still very unresponsive to this massive demand as the three main landlords (Malawi Housing Corporation, Lilongwe City Assembly and the Department of Lands) in the city are still following very bureaucratic land administration procedures. The consequencies of which are already being felt by all, the rich have begun accessing communal land thereby creating squatter settlements for the rich along M1 (6 Miles, Bunda Turn Off, Mchinji Road and Lumbadzi). The middle income have also invaded the government land in areas like new Gulliver, Baghdad and Dubai whilst the poor are also leading the expansion of such informal settlements like Kauma, Mtandile and Chinsapo. What has been lacking therefore is the supply of formal housing, whose rental and prices have correspondingly rose. The informal market has been filling the gap and the prices in this informal market are also rising.

The rise in the prices for both rent and for sale will continue in the forceable future as the City, Government and all the other stakeholders do not put their heads together to solve this problem that is affecting all the people (the rich, middle income, low income and the poor) but unfortunately is hitting the poor the hardest.