The rising cost of construction, coupled with the high cost of finance, has made housing unaffordable to the majority of low- and middle-income earners, despite efforts to lower costs.
And while private developers blame unfavourable mortgage interest rates imposed by banks, land owners and government authorities for the deficit, they are in turn accused of side-lining these segments in favour of the lucrative middle- and high-end market.
It is this disparity that has seen the State, through the National Housing Corporation (NHC) and mortgage lender Housing Finance, devise ways of providing houses for this neglected majority.
NHC has over the past decade sought to provide affordable housing for all segments of the market, a move that saw the birth of an expanded polystyrene (EPS) panels factory in Machakos in 2012.
The aim was to facilitate large-scale production of affordable houses using EPS technology.
“The use of EPS panels as a substitute for traditional materials used in erecting walls, stairwells, floors and roofs is expected to reduce construction periods, as well as direct and indirect building costs. Besides return on capital invested, building a house using EPS panels will significantly take less time than when constructing using conventional materials such as stones,” the corporation says.
The technology, which has been used successfully in Mexico, Britain, Qatar, Nigeria, Mozambique and the US, is expected to alleviate the housing shortage once embraced by the 47 counties.
The EPS factory has an annual production capacity of 126,720 panels, which translates to 460,800 square metres of construction material. The NHC says that the construction industry is growing, as evidenced by the industry growth rate, increase in total cost of materials for all buildings, as well as the value of reported private building works completed in towns across the country.
It notes that, although the cost of housing has been increasing beyond the reach of low-income earners, most developers anticipate that low- and lower-middle class housing will drive demand in the future.
“Furthermore, property investors might shift their attention to the low- and lower-middle class housing sector since the upper and upper-middle class housing market is experiencing stagnation due to the economic slowdown and threat of oversupply,” the corporation notes.
Experts say the EPS panels will be accepted once people start viewing them in terms of affordability, availability, safety, security and construction speed. The technology is environment-friendly as it reduces the use of quarry stones, bricks and timber. It also makes mass production easier.
The corporation has also scaled up its development schemes in the counties and currently has projects in all major towns. It has also announced plans to construct 15, 000 affordable houses yearly using a combination low-cost cement and structural insulated panels (SIP) technology targeting the growing middle class.
The plan, which began with the invitation of tenders for the construction of four factories which will build the panels two weeks ago, is expected to begin in March next year, when the first one in Mavoko on the outskirts of Nairobi is completed.
It is estimated that the cost of building a three-bedroom house could drop to an average of Sh1.2 million from Sh3 million using EPS technology.
Also as part of its latest efforts to provide affordable housing, the corporation is seeking to team up with private developers and financiers at the county level in a partnership that has roped in the state mortgage lender, Housing Finance.
Housing Finance has also upped mortgages and is leveraging on the recently launched construction solution known as Makao to drive retail deposits. Makao is a seamless end-to-end building solution that involves the mortgage lender and a consortium of building professionals including architects, project managers, quantity surveyors, legal advisers, civil and service engineers and contractors.
HF Managing Director Frank Ireri said recently that the firm intends to diversify its loan book to reduce reliance on mortgages and also open at least five branches in the current financial year to grow its retail business.
The integrated financial services provider has unveiled more than 50 home construction designs aimed at delivering access to quality and affordable housing for the middle and lower end of the market.
The designs are marketed under Makao.
Mr Ireri noted that the supply of affordable units falls short of demand, a situation that has been aggravated by inadequate supply of affordable stock of housing units.
“Above all, the growth in middle-income brackets has created a huge demand not sufficiently met. As such, the firm will roll out innovative products as part ot its strategy to deliver a smooth, flawless and convenient process to the customer,” he said.
Makao seeks to address the key challenges home owners undergo during construction such as poor supervision, cost overruns and inflated costs, fluctuating prices of materials, delay in project completion, use of substandard materials, theft of materials, diversion of construction funds and unqualified fundis.
Poor workmanship and use of low quality materials have been blamed for nullifying the savings of home construction through higher maintenance and repair costs.
The consortium is working on more than 50 designs with details on design, pricing, built-up area, construction period and proposed plot size. HF clients will access 100 per cent financing.
The move hopes to save home owners up to 30 per cent of the total cost, which would go to developers as profit.
Makao was introduced in 2007 as a convenient solution for people who owned land and were seeking a one-stop construction solution.
The partnership between Housing Finance and the professionals will save potential home owners time spent seeking regulatory requirements and supervising construction work, while assuring them of a finished product.
The solution targets individuals, Saccos, corporates, Kenyans in the diaspora, investment groups, schemes and counties.