One of the challenges faced by developing economies is high inflation.



An economy bedeviled by constantly rising high inflation rates is home to rising prices of prices that satisfy basic needs for food, clothing and shelter.



Continuous rise in yearly rents compounds the housing problem that is a daily reality in many developing economies.


Someone living in such an economy would welcome easily accessible housing finance options.



What is housing finance?



Housing finance include mortgages, home equity loans and other financial products and services which could be used to acquire a residential property, develop, maintain it or pay rents to live in one.



Housing finance makes homeownership possible and accessible. And also serves as a hedge against inflation.





Which housing finance options are available to a prospective homeowner in a developing economy grappling with high inflation?



Depending on your financial capacity and risk tolerance, you can choose any of the following options to fill your housing need.



1. Mortgages.



Using a long term mortgage instrument to buy a home is the first best option to explore.



Mortgage is a long term debt with repayment spread over a long period that could spill over into a time of decline in interest rate.



If the interest rate should decline, especially for fixed interest mortgage, the actual fixed mortgage amount repaid would be lower in real terms.



Alternatively, if it’s a variable-rate mortgage, the mortgage index would be used to adjust the interest rate to prevalent market prices, as they are influenced by changes in inflation rates.


2. Real Estate Investment Trusts (REITs).



The second option for someone living in an economy facing the challenge of galloping inflation is an investment in Real Estate Investment Trusts (REITs).



REITs are companies that focus on owning, financing and operating income generating real estate across a range of property sectors.



An investment in REITs gives the investor the chance to earn income while experts run and manage these companies.



You may use the income earned to buy a home for yourself or pay property rents.




3. Government sponsored housing scheme.



A government sponsored housing scheme is another option.



Governments sponsor housing development projects to make affordable housing available to citizens.



The housing project is mostly designed to make it easy to be either a homeowner or to pay easily affordable rents.


https://ayipost.com/f/what-are-the-top-housing-finance-options-during-inflation?

Thank you for your detailed and informative post.