By The Standard
The method of homeownership
has divided opinion among industry experts over the year, but it is more
pronounced now following the devastation of Covid-19 on incomes.
Various restrictions put in
place since last year to contain the pandemic have led to companies laying off
some employees or requiring them to work from home on reduced pay.
Working from home has also
brought the issue of space to the fore as people get locked in with their
families.
“Most of the people who do
not make a lot of money will definitely be looking for affordable housing,”
says Beatrice Wacuka, a research analyst at Superior Homes Kenya.
“That is why you see some of
those residential areas around the city now deserted as people look for cheaper
options. A lot of people are looking for options, and housing is now an issue
most discussed.”
She says as the markets are
in stress, people who can afford to buy some of the properties on offer should
go for them.
“Of course in the end the building will be the cheaper option, but at a time like now even ready-made
property is tending towards affordability,” says Wacuka.
Sale prices and rents of
prime residentials declined sharply last year compared to 2019, according to
Knight Frank’s Kenya Market Update for the second half of 2020.
This was attributed to the
continued oversupply of rental properties, less disposable income due to the
unfavourable economic climate brought by the pandemic, budget cuts from
multinationals and fewer expatriates in the country.
Knight Frank Kenya Managing
Director Ben Woodhams said although there has been a downward trend of prime
rents and sale prices, there was increased market activity in the second half
of the year.
“Landlords, developers and
sellers, aware of the economic situation, became more flexible and were willing
to negotiate lower prices with potential buyers and tenants,” he said in the
Kenya Market Update for the second half of 2020.
Some industry players say
people looking to own homes should consider doing their own construction.
“It is cheaper than buying
completed units,” says Mizizi Africa Homes Chief Executive George Mburu.
“With the prevailing economic
conditions, where there is poor cash flow and people want to save as much
as they can, construction is the way to go.”
A house that could cost Sh4
million to construct could cost up to twice as much when bought ready, he says,
while the only extra cost that the homeowner will have to incur in construction
is “a good dose of patience”.
“Constructing your own unit
will help you save. It takes time to get done but after several months of
waiting, you will have saved a lot of money,” Mburu says.
After recent complaints about
off-plan development where buyers have been shortchanged, Mburu feels such
projects are now fully back to life, with people disenchanted with living in
smaller, cramped spaces now looking for upgrades in off-plan properties.
“Sales have gone down,
disposable income has also reduced. Spending is now minimal. But there is a need
for more space for families.”
Wacuka also says high income
earners who are able to start construction and finish without getting caught
up by creditors in the middle should just build.
“Most of the low-income
earners resort to mortgages, and as earnings become more inconsistent, or as
there comes a possibility of them losing their jobs, they are likely to be
caught up by lenders, where they will lose everything they have invested in
their construction,” she says.
In Kenya, there has been a
problem of mortgage uptake, driven by a fear of losing a property to auction. The
mortgage to GDP ratio stood at 2.5 per cent in 2019, compared to other African
countries such as Namibia that had 25.4 per cent.
“The mortgage uptake has been
low due to the high-interest rates and high deposit requirements, soaring of
property prices, low-income levels making it hard to service loans and lack of
credit risk information for those in the informal sector leading to their
exclusion,” said investment firm Cytonn in a report on real estate investment
trusts released last month.
The government has made efforts to boost the housing sector through the Kenya Mortgage and Refinance Company (KMRC), a treasury-backed partnership with the private sector.
KMRC announced in the second
week of March that it had so far advanced Sh2.8 billion in credit to mortgage
lenders, accounting for approximately 7.5 per cent of the Sh37.2 billion they
had planned to lend from September 2020.
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This has enabled them to
refinance a total of 1,427 mortgages with the aim of boosting the number of
mortgage accounts to 60,000 in the next five years, according to the Cytonn
report.
“Mortgage accounts growth is
currently being constrained by a tough economic environment with potential home
buyers suffering from job losses and salary cuts, the relatively low loan size
provided by KMRC capped at Sh4 million for residents within the Nairobi
Metropolitan Area and Sh3 million for all other areas outside the NMA, and risk
of default discouraging lending,” the report said.
Mburu says off-plan
developers play a critical role in homeownership. He says many of the
developers invest in professionals that help interested property owners to
focus on other things while their houses take shape without requiring them to
be present to monitor progress.
“Some people are too busy
with their lives and they might not have the time to monitor the construction
day in, day out. That is where off-plan developers come in,” he says.
Baoriat Agencies is committed to helping you find the best place for you to settle in Eldoret town. We walk you through the entire process of acquiring your own property in Eldoret until it has been transferred into your hands.
To learn more about buying a property in Eldoret,
Call 0721-554937
WhatsApp https://wa.me/0721-554937
Email evekibet@gmail.com or
Visit us at Juma Hajee Building room number 16, Eldoret town
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