For many years, housing finance in Tanzania was largely informal and conspicuously lacking amongst the low income groups. In 2008, the Government adopted a housing finance legislation that introduced for the first time mortgage finance in Tanzania. This was followed in quick turns by national debates on housing policy, micro finance in housing, changing role of the public national housing corporations and building materials supplier-organizations.

A steady performance of the real estate market has been observed. The once dormant National Housing Corporation was rejuvenated and braced itself to avail to the market 3,000 units a year from the 50 units that it was producing for many years. While traditional players strengthened their grips on the market, new entrants mainly from the private sector in partnership with public organizations have made significant inroads to the market. The take-up of new housing units has been impressive mainly on account of the re-introduced mortgage facility. This has set in a speculative wave not only from local real estate investors but also from outside the country. It is therefore intriguing to conjecture on the long-term effects of the emerging mortgage market on the real estate market on one hand and on the other, in context of the experiences from mature mortgage, look into the potential risk areas such as foreclosures in the delivery of mortgage services in Tanzania.

This paper is an attempt to study the implications of the adopted housing finance approach on the real estate market. It reflects on policy issues and debates that have pre-occupied both the finance and the housing sectors in Tanzania amidst the housing finance crisis elsewhere, drawing parallel to the possible impacts this may have on the emerging mortgage markets in Tanzania and eventually in solving the housing problem.