ANALYSIS OF AFFORDABLE HOUSING MARKET NEEDS IN KENYA: A CASE OF NAIROBI METROPOLITAN AREA

Abstract

The main objective of the study was to analyze affordable housing market needs in Kenya with specific reference to Nairobi metropolitan area. The study specifically aimed to; determine demographics of people living in Nairobi Metropolitan Area; establish levels of income and expenditure on housing, utilities, transport, entertainment etc; determine rents paid for the various houses; identify Housing Preferences in terms of location, house type, sizes, prices etc and establish Factors that people consider when buying/renting a house.  The study employed a descriptive survey research design and the target population comprised of 3200 residents in Nairobi Metropolitan Area. Data collection instruments comprised of online market and physical questionnaires in more than 40 sub-markets in Nairobi Metropolitan and the Nairobi County at large. Stratified random sampling technique was employed to select the 1600 respondents as the sample size for the study. The gathered data was analyzed using descriptive statistics and presented using tables and charts.The study findings indicated that affordable housing market needs in Kenya was determined by people demographic characteristics; level of income and expenditure on housing utilities; transport, entertainment etc; rents paid for the various houses; housing preferences in terms of location, house type, sizes, prices etc and factors that people consider when buying/renting a houses. On housing type and location preference, majority 70% of residents in Nairobi Metropolis earned Kshs 100,000 and below and spent approximately 25% of their income on housing costs. This means that for affordable housing the limit for monthly expenditures should be Kshs 25,000. The study concluded that location and access to and from work place is a key consideration when determining where to buy/rent a house.  A 3-bedroom and 2-bedroom units were the most preferred typologies for buyers looking for houses to reside in. Furthermore, detached houses were the most preferred units, followed by apartments. In terms of location, areas in Kiambu County such as Ruiru, Juja, Thika, Kikuyu, Kiambu town were the most sought for and thus presented the best opportunity for investors. The study recommended for the implementation of a better integrated framework that brings together a wider set of comprehensive solutions to addressing the affordable housing market needs problem, with the government at the centre as the driver of the initiative. The government, the Capital Markets Authority, NSSF, Retirement Benefits Authority, Kenya Revenue Authority, private sector finance and development, all have a role to play and the specific solutions need to be wider. The study also recommended for an increase on the Sources of Funding which may Include the Deepening of Capital Markets & Access to Non-Bank Funding – There’s need to have a concerted effort to look into ways of deepening the capital markets as a means to raising capital for funding affordable housing development aside from bank financing. These alternatives may include REITS, tax relief etc. Strong Government Support should be enhanced, government involvement and commitment is imperative for the realization of affordable housing.

Key Words: Affordable Housing, Market Needs

CITATION: Kimani, J. (2021). Analysis of affordable housing market needs in Kenya: A case of Nairobi Metropolitan area. The Strategic Journal of Business & Change Management, 8 (2), 466 – 476.