The number of houses built in Nairobi City last year grew by a slower rate of 12 percent, an indication of a wait-and-see stance by some private developers, amid costly credit and as the government ramped up its affordable housing programme.
In 2022, the number of houses built in the city grew at a faster rate of 27 percent, data from the Kenya National Bureau of Statistics (KNBS) shows.
This points to a major slow-down that could also be attributed to the hike in interest rates, which might have pushed up the cost of building.
An additional 2,033 houses were built in Nairobi in 2023 compared to 3,633, pointing to a slowdown in the property market which had begun its recovery following the hit from the pandemic in 2020.
A total of 18,943 houses were built last year compared to 16,910 in 2022, with most of them being single rooms and bed-sitters popular among the poor in Nairobi.
The sharp increase in the number of houses built in 2022 was reported across all the housing types, from single rooms to four-bedroom units, before all of them slowed down in the following year.
The slow growth also came at a time when the economy was beset by high interest rates occasioned by the decision by the Central Bank of Kenya’s tightening policy aimed at dealing with the sky-high inflation.
But it is the promise to build 250,000 affordable housing units annually under the affordable housing programme that might have rattled private developers, with some of them going slow on their investment plans.
The affordable housing programme—one of President William Ruto’s flagship projects— seeks to plug the housing deficit in the country which stands at 200,000 houses annually.
But there are also fears that it might be counterproductive should the government fail to hit its target of 250,000 houses annually, given that private sector investment is slowing down.
The government’s budget for housing budget in the financial year ending June 2024, rose more than nine times to Sh92.53 billion from Sh10.52 billion in the previous financial year, data provided by the State Department for Housing and Urban Development shows.
Two institutions at the heart of the affordable housing programme—National Housing Corporation and the State Department of Housing and Urban Planning—delivered 3,521 in 2023, more than double the 1,390 delivered in the previous year, as the affordable housing took shape.
In his Jamhuri Day speech, President Ruto said since September this year, 1,200 affordable housing units had been completed.
“Additionally, the State Department of Housing has advertised 4,888 units available for sale to the public through the Boma Yangu platform. Our goal to increase the number of mortgages from 30,000 to one million has now shifted gears,” said Ruto.
“Our delivery pipeline for affordable housing now has a total of 124,000 units at various stages of development across Kenya, while a total of 840,000 planned projects over the next four years are projected to create 1 million jobs,” added the President.
The wait-and-see approach might also be due to the shift in focus by private developers to affordable housing projects.
Under the affordable housing programme, the government intends to make serviced land available to private developers through a public-private partnership (PPP) to support a large-scale supply of affordable homes, said the Kenya Institute for Public Policy Research and Analysis in a paper.
The government is also expected to provide infrastructure such as water, sewage, access roads, and power to attract the private sector.
High cost of serviced land and credit are some of the hurdles private developers have faced in building the in-demand affordable houses, with those who can’t afford decent homes settling in slums.
