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Will such executive orders solve the housing problem in the Ethiopian capital even in the short-term? The mayor of Addis Ababa has banned rental hikes of residential homes in Addis Ababa for the next 6 months. The executive order also bans the eviction of tenants for the same period of time. The purpose of the executive order is giving a temporary relief to low-income residents of the city, who are already struggling to survive the double digit inflation among many other deteriorating factors. This executive order comes as great news to those who have already secured a place they can call home at least for now but the absence of rental ceilings means that landlords can charge any amount they want if they still have a vacant place. If one is looking for a house for rent in Addis Ababa right now, she may have to spend at least double of what she would have spent if she had leased the same property a year ago. A young lady interviewed by Sheger FM this week told the journalist that she has to tutor kids to supplement her income although she has a fulltime job as a hotel receptionist since her salary from her regular job only covers about half of her monthly rent for an apartment she is leasing in Addis Ababa.

A young banker who is currently looking for an apartment for rent in Addis Ababa and spoke to us said that the amount of rent apartment owners are asking even for a studio apartment is “crazy”. For this reason, if he cannot find something that is reasonably priced in the coming two weeks, he doesn’t have any choice but to stay with his parents for the time being. Despite such circumstances, he still feels that he is “blessed” for two reasons. Firstly, the fact that his parents, who own a home live in the city is a great fallback option for him. He can still keep a roof over his head until things improve by staying at his parent’s although it is not ideal. Secondly, as a banker, he has a special privilege of getting a mortgage loan to buy an apartment, which is nearly impossible for most dwellers of the city. Despite his optimistic outlooks, an article featured on The Reporter a few days ago details how challenging the housing market has become even for bankers to purchase an apartment in Addis Ababa.

The weekly paper spoke to a branch manager at one of the commercial banks in Ethiopia and reported on his experience in great detail, which is quite telling of how the Addis Ababa housing market has developed recently. The banker who, is entitled to get financing on a house or an apartment that costs up to 2 Million Birr, has found it impossible to find anything to his liking for that amount of money in Addis Ababa. He told The Reporter that the property market in Addis Ababa is “ridiculous”, adding that a poorly finished condo that was going for 1.1 Million Birr a month ago is now listed at more than 50% of the original selling price. In his assessment, paying such hefty price for such poorly built and finished apartment is not worth it. That is why he has decided to try to buy a house in one of the small towns in the vicinity of Addis Ababa. Even this decision comes with a dilemma as price of homes has also increased in his target areas. Even if he succeeds in purchasing a good house in a town nearby the capital, commuting is impossible for him since he does not have a car. For this reason, he needs to find a house or an apartment for rent in Addis Ababa and let his house to somebody else. Since rental levels in Addis Ababa and in the other towns is not comparable, the banker might find it very challenging to pay the high rent in Addis Ababa while also servicing his mortgage loan.

The Reporter has conducted a quick market assessment survey and found out that a one bedroom condominium unit (built by the government’s low cost housing scheme) now costs as high as four million birr in the most desirable locations such as Gergi, Gotera, Balderas and Lideta. This price is double of the price registered two years prior. The price of two bedroom condos is staggeringly high, reaching as high as six million birr. This amount of money would have been enough to buy a luxury apartment not far from the city centre or even a villa sprawling on 100 Sq M of land at the outskirts of the city couple years ago.
In case of real estate companies, the rise in the price of houses or apartments for sale in Addis Ababa is even more shocking. A unit rate of 100,000 Birr per Sq M for buying an apartment in Addis Ababa, which was unheard of before 2021, is now the bottom level developers would charge.

When it comes to rental, the story is more of the same. Even middle income families are finding it increasingly challenging to find a descent house for rent in Addis Ababa at a rental level they can afford. The rental price of apartments is also shooting up. A 3 bedroom apartment for rent in Addis Ababa now costs at least 30,000 Birr in some of the popular residential neighbourhoods sought after by locals.

Hence, the recent executive order will surely save the lives of some residents of the city from going form bad to worse but considering the rapidly increasing prices of homes in Addis Ababa and the astounding growth of demand year after year, short-term fixes such as this one are not going to solve the housing crisis in Addis Ababa in the long-term. The Addis Ababa City Administration needs to come up with more innovative ways and technologies to catch up with the unprecedented demand.