Center for Affordable Housing Finance Africa (CAHF), has been demonstrated that the selling prices of newly constructed houses across the continent are not solely driven by the cost of building materials.
Although the cost per square meter of a building significantly impacts the sale price of a housing unit, it is not the exclusive or primary cost driver.
The study focused on collecting data on typical building materials, including the cost per square meter of ceramic floor tiling, steel profiled roof sheeting, roof tiling, and a 50kg bag of cement. Upon comparing these material prices across all African countries and correlating them with the cost of the cheapest newly-built houses in each country, no clear pattern emerged.
According to the findings, the prices of the sampled cheapest newly built houses by private developers in urban areas range from USD 7,111 in Kenya to USD 99,842 in Sudan, with the majority priced between USD 15,000 and USD 40,000. Interestingly, the study revealed that building material prices do not consistently align with house prices. For example, in Cameroon, where houses are more expensive, building materials are cheaper than in Uganda, where houses are cheaper despite higher building material costs.
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The report delves into additional factors influencing house prices, such as construction choices and processes across different countries. It discovered that low-rise buildings, like bungalows, cost less to build than high-rise apartments due to the efficient use of land and shared infrastructure in apartments, reducing development costs per unit.
The study also highlighted that stand-alone dwellings, requiring more land and individual infrastructure connections, tend to be more expensive per unit compared to apartments that share services.
Higher costs associated with apartment blocks are attributed to financing, compliance and approval fees, as well as professional and project management fees. Building apartments involves additional expenses for approvals, compliance with regulations, and hiring professionals for management, contributing to overall costs.
Various factors affecting total development costs for real estate projects were explored in the study, including land use and associated costs, marketing, developer overhead and management costs, and the expenses related to supporting infrastructure.
In summary, while building material costs play a role in house prices, the report emphasizes that construction choices, land use, and shared infrastructure significantly influence overall development costs.
