I have been struggling to understand why majority of Nairobians are tenants and not home owners compared with their counterparts in countries like South Africa. It is perplexing that for a leading economy in this part of the continent, majority of residents in the capital city and other urban areas are largely tenants. Is there something we do not know that is not adding up?
Valentia, Nairobi
It is an open secret that majority of Nairobians and residents of major urban areas countrywide are not home owners.
Recent statistics from the Kenya National Bureau of Statistics (KNBS) paint employed Nairobians as ‘career’ tenants with 86.4 percent of households live in rented houses.
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Nairobians can argue that they are not alone as 82.2 percent of households in Mombasa are tenants. Others are Kajiado (59.5 percent), Kiambu (51.6 percent), Nakuru (46.3 percent), Uasin Gishu (44 percent) and Kisumu (42.2 percent).
Nairobians are generally hard workers who take their daily hustles seriously. However, several insurmountable hurdles have ensured home ownership remains a pipe dream to many.
For instance, high property prices have ensured that many Nairobians remain tenants and live from hand to mouth. Majority cannot also afford mortgages over the high interest rates and the initial deposit required to access mortgage.
There are also many Nairobians who hustle in the informal sector and may afford houses, but do not, due to lack of credit risk information.
There are also other factors that have kept Nairobians from owning homes like lack of real estate finance to fund large-scale affordable developments and low-income levels which has made it hard to service loans.
Recently, Central Bank of Kenya (CBK) Governor Patrick Njoroge said that 99.3 percent of bank accounts countrywide have deposits of less than one million shillings. Conversely, this equates to approximately 350,000 Kenyans only who have over a million shillings in bank savings – how can more Nairobians be home owners?
According to a recent wage distribution data by the KNBS, three-quarters of all Kenyans working in the formal sector are on a monthly salary of below Sh50,000.
The data indicates that the number of people in the typical Kenyan employee, who is paid between Sh20,000 and Sh29,999 per month, stood at 964,943 or 36 percent of the 2.6 million salaried workers three years ago.
Therefore, home ownership in urban areas countrywide stands at 21.3 percent implying that more than 78.7 percent of the urban population are renters, compared to South Africa which has over 53 percent of its urban population owning homes.
According to figures from the National Housing Corporation (NHC), Kenya has a housing deficit of two million units which grows by 200,000 units annually.
Real estate pundits attribute the current runaway housing deficit to inadequate supply over the fragmented nature of the sector, high development and land costs.
Other factors include the perpetual focus on high end markets due to lack of profitability at the lower end of the market and inordinate delays in issuing building approvals in Nairobi, Kisumu and Mombasa counties.
- Harold Ayodo is an Advocate of the High Court of Kenya
