Mortgage debts remain flat as incomes lag
Lewanika Timothy | Monday July 14, 2025 06:35
With households grappling with subdued incomes and in spite of a housing shortage, mortgages have taken a knock and remain unchanged whilst the rest of Southern Africa residential lending market remains bullish.
According to a report by the Financial Stability Council published recently, residential real estate loans, known as mortgages, remained flat at P14.8 billion between February 2024 and February 2025, a trend which made Botswana a regional outlier as mortgages continue to grow throughout Sub-Saharan Africa.
The FSC, which is a multi-body council consisting of the central bank as well as other financial agencies and institutions, noted that this muted growth meant that household debt in Botswana mainly comprised unsecured debt in comparison to other countries where household debt stock comprises mainly of residential loans.
“Residential real estate loans were relatively unchanged at P14.8 billion in February 2024 and February 2025, constituting 27.7% and 26.3% of total household credit and total credit, respectively,” the council noted. “These proportions are very low compared with South Africa and Namibia, where mortgages constituted 61% and 70%, respectively, of total household loans. “This suggests that the level of domestic housing finance is not commensurate with the needed development and growth path to fill the apparent need for housing, as well as the financing gap.”
Signs of a slowing residential real estate sector were noted early last year in the first quarter, when a report by local property player Riberry noted that Gaborone’s usually bullish property market experienced a slowdown in the first quarter of 2024, as oversupply created a glut, driving down valuations and eroding property prices.
The report, cited in the Bank of Botswana’s (BoB) Household Indebtedness report for 2024, noted a softening local property market with increasing vacancy rates as supply outpaced demand, overturning the trend seen throughout 2023.
“According to the latest (2024 Q1) Riberry Report, the residential rental market showed signs of deterioration in the first quarter of 2024, compared to the fourth quarter of 2023,” the BoB said, citing Riberry. “This is evident from the rising number of properties available for rent and declining house prices.”
The FSC noted in its latest report that mortgages could be low due to constrained income levels, meaning that potential homeowners do not have enough disposable income to add on more debt given the slow economic growth the country has been experiencing.
The council also noted that households could also be failing to afford the cost of building and land which have been on an uptick in places like Gaborone.
“At the same time, growth in incomes could be restrained relative to the increase in residential house prices over the years, possibly reflecting limited housing stock in various categories, or availability of land and affordability of building materials,” the council stated.