Housing Prices Have Tripled in Less than Two Years
Buying houses from real estate developers incurs 15Pct Value Added Tax (VAT) and 6Pct title deed transfer fee on the actual price tag. Additionally, real estate developers take more time to deliver housing units which further escalates the cost of construction—ultimately pushing the price tag further up. The price of houses developed by real estate firms has further skyrocketed because of the price of finishing materials, which are almost entirely imported, have dramatically shot up by over 200Pct over the past couple of years. This is attributable to the worsening foreign currency shortage and subsequent rising exchange rates of major foreign currencies against the local currency.
This makes houses built by real estate companies over expensive for the vast majority of Addis Ababans. As a result, house buyers have been looking for affordable options.
Villas developed by unlicensed individuals have become one of the options. These players have lesser tax obligations and deliver houses for less in a shorter time span by using adhesives and other chemicals to shorten the curing time of concrete. For this and the curativeness of the business, they are mushrooming and becoming more active in the housing market.
As their number increases, there is fear that the market will become even more informal and out of the watchful eyes of the government. EBR explores.