Why owning a home is a ‘pipe dream’ for Kenyans

The growing urban population is in need of affordable housing to meet demand.

NAIROBI, KENYA: Lowering the cost of land, construction and financing has been identified as key to achieving affordable housing.

According to a report by the global consultancy firm, McKinsey, if market-oriented solutions are found to address these factors, the cost of housing could drop to between 20 and 50 per cent.

It also cited operations and maintenance costs as other factors that make owning a home pricey affair.

The report indicates that in the face of rapid urbanisation and income growth, demand by the growing urban population for affordable housing could grow from 330 million households to 440 million by 2025.

It notes Kenya’s devolved system of government is projected to fuel massive urbanisation and subsequently increase demand for land to develop.

According to statistics, the Kenyan market is able to supply about 50,000 units annually against an average demand rate of 250,000 units annually.

Speaking during the launch of the report at a Nairobi hotel, Jonathan Woetzel states that addressing the affordable housing challenge requires urgent remedial measures to make houses affordable.

CHALLENGES

The report, a blueprint for addressing housing challenges, cites the adoption of clean and green energy technologies as an integral step towards reducing the cost of housing in the country.

Woetzel, the Shanghai-based director the business and economics research arm of McKinsey, noted that the number of affected households is growing phenomenally and the negative spill-over effect is likely to multiply.

“For families lacking decent affordable housing, health outcomes are poorer, children do less well in school and tend to drop out earlier, unemployment and under-employment rates are higher, and financial inclusion is lower,” he explained.

Despite housing demand exceeding supply, Woetzel noted that there are proven ways to narrow the gap.

“To replace today’s inadequate housing and build additional units needed by 2025, the country would require an investment of about Sh765 trillion to Sh935 trillion ($9 trillion to $11 trillion).

However, given the high cost of land, the total cost could exceed Sh1.35 zillion ($16 trillion).

Decent affordable housing, he reckons, is fundamental to the health and well-being of the people, besides enabling smooth functioning of the country’s economy.