Only 1pc urban workers can buy own homes as rates hit the roof

You need to earn at least Sh282,000 a month to buy a house valued at Sh5.7 million, as high interest rates price most buyers out of the market.

According to Hassconsult, a property market tracker, only one per cent of urban Kenyans would be eligible to buy houses at the current rates that range between 15 and 18 per cent.

Sh5.7 million is the average going price for a medium two-bedroomed middle class house.

Only another four per cent of the population can afford a mortgage for a Sh3.9 million house at the current interest rates, which have remained largely unchanged this year.

Only half of Kenyans living in urban areas can purchase a house worth Sh700,000 through mortgages.

This indicates a serious housing problem for the country. These potential house buyers have a gross monthly income of between Sh36,459 and Sh281,552.

“Even the often cited target of a Sh1 million unit can hardly provide housing to many people at current mortgage rates, with just 20 per cent of urban Kenyans able to afford the mortgage on Sh1.1 million house,” said the Mortgage Company managing director Caroline Kariuki.

The experts are calling for alternative financing of housing, most preferably a secondary mortgage market and release of pension funds to enable more people in urban areas to buy their own houses.

“Pleas to the banks from many quarters to cut their margins, and cut these rates, remain resoundingly unheard, even as the same banks unveil profits of ever larger scales.

“In a market where the institutions dedicated to providing finance are themselves stunting the take-off of this finance sector, it becomes imperative to find alternative sources of finance,” Ms Kariuki said.

She said banks had maintained the same interest rates since they to increased their lending margins after a series of successive cuts in Central Bank benchmark rates.

“There is a massive need for housing but 90 per cent of approvals are in apartments, which indicate a low financing for own house construction,” said Hassconsult Ltd head of marketing and research Sakina Hassanali.

President Kenyatta and his deputy William Ruto have been calling for lowering of lending rates to enable more people take up mortgages.

A committee has been formed to study the interest rate and make recommendations on how they can be reduced. Mr Ruto said the country had only 20,000 mortgages, yet the potential, going by the level of development of the economy, should be about one million.