Housing remains a critical challenge in Ethiopia. Limited access to land, finance, and decent employment has left the majority of citizens unable to afford adequate housing. With 70 percent of the population under the age of 30, the demand for housing is rising rapidly. Cities such as Addis Ababa, Hawassa, Bahir Dar, Dire Dawa, Adama, and Jimma are experiencing exponential population growth, pushing large segments of the urban population into rented and substandard housing. The ultra-poor are often confined to informal settlements on the outskirts of towns, where basic utilities are scarce or entirely absent.
To address the housing deficit, particularly in Addis Ababa, the government has encouraged real estate developers to construct high-rise apartment buildings and sell units to those who can afford them. As part of this strategy, the government provided land to developers either free of charge or through long-term leases since the early 2000s. As demand for apartments grew, developers began acquiring plots from private landowners and constructing high-density buildings, often in the city’s hinterland, supported by improved road networks and utility access. Between 2013 and 2023, housing prices rose significantly, enabling large-scale developers to make unprecedented and often windfall profits. Encouraged by these gains, the number of licensed real estate developers multiplied within a few years. Many private landowners also converted residential plots into multi-unit apartment buildings for sale or rent.
The development of legal frameworks and regulatory mechanisms for the real estate sector has been protracted. Historically, the lack of robust regulation fostered an environment where developers operated with limited accountability, leading to an inequitable market. With the primary goal of increasing housing supply, authorities largely turned a blind eye to exploitative practices. Developers set prices arbitrarily, often quoting in foreign currency; diverted advance payments to other investments; delayed construction indefinitely; unilaterally altered building designs; and used substandard construction materials. These practices have affected thousands, perhaps millions, of homebuyers, many of whom lack the knowledge or legal recourse to challenge such violations. Most remain silent, while others struggle to find effective institutions to hold developers accountable.
In 2003, the government issued a Proclamation that laid the foundation for condominium development and the establishment of communal housing associations. This was around the time when Addis Ababa and secondary cities launched large-scale public condominium projects. The proclamation enabled the formation of housing associations to manage shared ownership of buildings. However, it failed to anticipate the rapid growth of the private real estate sector and did not regulate private developers.