Kenya - Low investment by the government in housing delivery is one of the key bottlenecks perpetuating the deficit in housing supply in the country. The government's planned investment in housing delivery in the short term 2009-2012 amounts to approximately Sh4.5 billion excluding the cost of related infrastructure. It is estimated that this funds can only aid in delivering 3,000 units at the average cost of Sh1.5 million per unit. A recent research by the Central Bank of Kenya (CBK) and the World Bank shows the annual demand for housing exceeded 210,000 units in 2010 with supply stagnating at about 50,000 units, a situation expected to be exacerbated by rapid urbanisation in the country.

The survey showed that only eight per cent of the urban population, representing about 1.4 million people or 350,000 households, can qualify for mortgage loans. People in the rural areas cannot afford mortgages due to meager incomes, far too low to make economic sense for the fledgling Kenyan mortgage market.

Demand is especially high in the low income segment which the private sector finds unattractive to invest in owing to low returns. Private developers cite the high cost of land and building materials as hindering the delivery of low-cost houses which would be affordable to the masses.

Building materials are estimated to account for approximately 40 per cent of the total construction costs. According to the housing ministry, building materials costs have risen by as much as 40 per cent between 2007 and 2009 which have resulted in increased costs of housing.

Speaking at a ground-breaking ceremony for the construction of 88 apartments in Ruaka on Saturday, assistant minister for Housing Margret Wanjiru said the government is facing challenges in addressing the huge deficit in housing supply.

Low access to finance coupled with high interest rates, low levels of income, absence of suitable and serviced land, high cost of infrastructure and stringent planning regulations have been noted as major bottlenecks the housing sector to both the developers and prospective home owners.

Hon. Wanjiru said the housing ministry hopes to address most of these challenges by introducing a comprehensive legal framework for the sector once the draft Housing Bill is enacted into law. "The Bill aims to improve the effective coordination and facilitation of housing development processes," she said.

During the recent 9th Homes and Auto Expo at Sarit Centre, Wanjiru said though the drafting of this Bill has been finalized by the State Law Office, the Treasury has been dragging its feet in okeying the bill for subsequent approval by the Cabinet. "The Treasury has never treated the housing sector with the commitment it deserves. Instead, it has been a stumbling block," she said, adding that at least five per cent of the budget should be allocated to a national housing fund to facilitate the construction of necessary infrastructure.

James Waithaka

Nairobi Star/10/03/2011