Housing Crisis in Nairobi to Worsen, Experts Warn

The challenge of providing low-cost housing in the country is likely to snowball into a crisis if an alternative financing model is not found, experts have warned.

This caution has been sounded even as three important Bills that are meant to facilitate faster construction and open up investment in the lower segment remain trapped in government bureaucracy.

Experts say the problem could be magnified once the counties take off, with government estimates showing that the national population will reach 61 million by 2030, with half of the number residing in towns.

The lowest cost of a house unit is Sh4.5 million, which majority cannot afford.

“There is absence of affordable financing model for low housing segment with demand in the middle and higher segments still high,” said property market expert Dan Ojijo.

Mr Ojijo says Kenya witnessed the highest increase in price of housing last year at 25 per cent in Nairobi and 20 per cent in Malindi, Lamu and Mombasa, making it more difficult for a majority to afford.

According to industry estimates, only 16 per cent of those in urban areas own houses, with the latest statistics by Hass Consult indicating that the rents were increasing as the demand for housing soars.

Shelter experts are calling for relevant laws to be fast-tracked to unlock growth of the sector to close the gap between the demand of 200,000 units against construction of only 50,000 units every year.

Last week, Housing assistant minister Margret Wanjiru said the National Housing Bill was at the Attorney General’s office to be harmonised with the Constitution.

Others yet to be effected are Build Environment Bill and National Building Maintenance Policy and Building and Planning Regulations to regulate the construction industry.

The government started a comprehensive national housing survey in September to enable planning.

It is projected that housing demand will swell as more people stream into urban centres, particularly the middle- and low-income earners.

Hass Consult Ltd, a firm that tracks the property market trends, said the reduction of interest rates following the cutting of Central Bank Rates from 16 per cent to 13 per cent had triggered renewed activity in the buying of houses in recent weeks.

The average bank interest rates have reduced from 22.5 per cent to 19 per cent in the last three months.

“We have seen more in the middle class being able to afford houses. The houses have been getting cheaper with adoption of new technology,” Ms Wanjiru said.

Experts, however, say the current prices are still way beyond what many in the lower middle class and the lower segment are able to afford.

The cost of housing is likely to remain high due to micro-economic issues that include cost of transaction, cost of land and labour and inflation.

Experts say that public-private partnerships would help mobilise the required capital to provide the houses much faster. Once the counties take off, experts say there will be expansion of already existing towns, as well as establishment of new ones which will increase demand for housing across the country.

Experts want the government to change the building code to spread out the range of building materials that are much cheaper than the traditional brick and mortar to help increase housing for low-income earners.

Other key areas to look into are land use policy, affordable credit and betterment of relevant infrastructure that includes roads, water and electricity.

“We have to wake up to the reality that demand for housing far outstrips supply. We must roll out housing projects at a pace equal or greater than the population growth, otherwise we shall have to live with the problem of acute shortages in the national housing stock,” Housing minister Soita Shitanda warned early in the year.

The minister said NHC will be facilitated to play a greater role in providing low-cost houses across the country.

Source: Daily Nation