This archive report was first published on 16 September 2019.
Kenya's housing crisis has deepened, with a staggering 2 million units deficit, a report by Cytonn Investments has revealed.
Published on September 16, 2019, the report highlights the country's growing housing demand, which stands at 200,000 units per annum.
However, the National Housing Corporation can only supply 50,000 units per annum, exacerbating the shortage.
According to the Ministry of Housing, a whopping 83% of the existing housing supply targets high-income earners and upper-middle-income segments, leaving millions of home seekers in the lower-middle-class segment scrambling for the remaining 15%.
The low-income earners are left with a paltry 2% of the housing supply.
The government's ambitious Big Four Agenda has identified affordable housing as a key pillar to drive the economy to double-digit growth, with a target of delivering 500,000 units by 2022.
The units are expected to cost between Sh600,000 and Sh3 million, with the aim of providing affordable housing to about 75% of Kenyans earning below Sh50,000 per month.
However, financing for end-buyers remains a significant challenge in Kenya, with Cytonn Investments attributing it to tight financing structures available for first-time buyers.
According to the 2015-2016 Kenya Integrated Household Budget Survey (KIHBS), only 26.1% of Kenyans living in urban areas own their homes, compared to 53.5% in South Africa.
The report also highlights the unaffordability of housing units in the market, with many Kenyans relying on savings and other sources of financing, including mortgage loans and local investment groups.
Access to housing finance remains a significant challenge due to low income levels that cannot service a mortgage, with only 2.9% of Kenyans earning above Sh100,000 per month.
The increasing property prices, boosted by demand and supply forces, have also hindered millions of Kenyans from affording a home.
High interest rates, stringent deposit requirements, and an underdeveloped mortgage market have locked out many potential borrowers.
According to the Central Bank of Kenya, there were only 26,187 mortgages in Kenya as at December 2017, out of an eligible population of 23 million people.
To address the housing crisis, the government has introduced policy and fiscal reforms, including tax relief on interests paid to lending institutions and the Home Ownership Savings Plan.
The National Housing Fund and the Kenya Mortgage Refinancing Company are also seen as incentives to make homeownership more affordable in the country.
