Kenya is struggling with a massive housing problem. Kenya needs to build approximately 250,000 houses per year to keep up with the growing demand. Kenya’s housing problem provides extensive opportunities for investment in construction. Kenya’s housing problem also unlocks opportunities for the building material manufacturing and supply sectors. Moreover, Kenya’s housing problem has the potential to boost overall economic growth.
ABiQ explores Kenya’s housing problem.
The need for affordable housing in Kenya is huge. The annual housing demand for Kenya is sitting at around 250,000 houses per year. Kenya, however, is only estimated to be equipped to supply 50,000 houses per year. Kenya has a housing deficit of 2 million houses, or an 80% deficit. Kenya is, therefore, in need of 2 million homes.
Kenya needs to build 250,000 houses annually for at least four years to plug its cumulative housing deficit of two million units.
The most affordable home built by a developer in Kenya is expected to cost roughly $15,000. Only around 11% of Kenyans earn enough to support a mortgage. A massive problem is a lack of finance. There are just over 25,000 mortgages in Kenya.
The Kenyan income bracket, especially in the rural areas, is incredibly low and irregular. The traditional banking system will, therefore, not provide mortgage services to this sector of the population, as they simply can’t afford them.
What can Kenya do?
More Kenyans could own their own homes if the state:
- Explored alternative financing solutions.
- Consider more sources of finance, such as the capital market.
- Opened up more land for affordable housing.
- Sped up the mortgage registration and title transfers process.
By making housing more affordable to Kenyans, Kenya can create new channels to boost overall economic growth.
The housing problem in Kenya has created extensive opportunities for investment in construction, and the manufacture and supply of building materials.
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