For George Watoro, a 26-year-old accountant with a Nairobi-based accounting firm FGC Kenya LLC, owing a home is something that has crossed his mind severally, mostly driven by the need to secure his future and that of his family (when he gets one).
His only setback, he says, ready to purchase homes are out of his reach and the mortgage market is prohibitive. “I think the housing market is extremely overpriced,” he decries.
Looking from what he deems reasonable, where the house sale price versus annual rental amount ratio is over 20, he believes he is better off renting.
For example, according to Hass Consult Q4 2018 property index, a development in Donholm priced at Sh15 million fetches about Sh60,000 in rent while a mortgage repayment for the same house would be about Sh175,000 paid over a period of 20 years.
Kenya is said to be a relatively young country, with United Nations estimating that there are more than 9.5 million young people, accounting for more 20 per cent of all Kenyans.
Bearing this in mind, experts concur that such a huge population cannot be left out when major decisions like housing developments are being made.
When it comes to housing, there is no better place to start than understanding young people’s needs.
Watoro says his preferred journey towards home ownership is the rent-to-own-model. “I have been talking to people and I have come across some options. I could choose to be paying rent at Sh15,000 a month or I could be paying for the same house Sh35,000 a month and at the end own it.”
Currently, because he has no family, all Watoro wants is a two bedroom apartment house or a fairly priced stand-alone house in a location close to his workplace.
“The only problem with stand-alone houses is that they tend to be far off from my area of operation and traffic does not help the situation, so a two bedroom apartment will serve me for now. Later when my income grows and probably with a family, I will look for a bigger house,” he says.
Asked about his ideal affordable home, Watoro says, “I have a Sh5 million ceiling and I am looking at 10 years for the payment period. Looking at my salary, I am willing to part with around Sh50,000 a month as instalment.”
Late last year, DN2 met Doreen Mutiga and Pauline Kasuki at a title deed handover ceremony in Kikopey, Nakuru County, for a project named Kikopey Ridge Phase One by real estate firm Property Reality Company (PRC).
At the fanfare-filled ceremony, some investors of 300 quarter-acre units were issued with title deeds.
What was striking about Doreen and Pauline is the fact that they did not leave their selfie stick behind when they came to collect their title deeds, perhaps the clearest indication of where they fall in terms of age group.
“We started saving via a savings and credit co-operative (Sacco) while in college, a move that enabled us to buy our first property one year after graduating from college in 2010,” Kasuki told DN2.
For then, the eight-year-long journey investing in property is fuelled by the need to safeguard their children’s future and the sad reality that women in most African communities rarely inherit property from their parents.
They told DN2 that the two properties in Kikopey, one for each, is their fourth in line, revealing that they will be embarking on developing the pieces of land already acquired.
“We are still in progress. For now we are comparing bids from different contractors to see what suits us. Most of what we are getting is way out of our means,” said Pauline when DN2 caught up with them last week.
For the young duo, key among the factors that will influence the decision on where to settle down with their family include location, accessibility, security, and availability of social amenities such as schools.
Having been in real estate for these years, Doreen says she would prefer constructing her own house as opposed to buying a ready one.
“If I decide to buy a house I am sure it won’t meet most of my requirements. For example, I would love to have a spacious house and a kitchen garden. There is also the possibility that I will be sharing some amenities with my neighbours, something that doesn’t excite me,” she says.
Pauline agrees with her friend, adding that the need to bid landlords and their pesky agents goodbye is yet another reason she can’t wait to have her own place.
For the years that Sally Kimutai, a property consultant with Mahiga Homes has been dealing with young home hunters, she can confidently classify them into two categories.
“There are those who buy houses as investments and those who want to live in those houses. In other words, they are looking for a home so that they can save themselves the trouble of paying rent,” she offers.
Still, when it comes to home hunting, young people present their needs based on age.
“Those in mid-thirties have their children’s welfare top on their list of considerations. So, presence of amenities like a children's playing area and swimming pool will be key for them,” says Kimutai.
“They also look at security, which is largely influenced by the location and the size of the house. For instance, nowadays people prefer to have a big sitting room with an open plan kitchen. Spacious bedrooms are also key,” says Kimutai, adding that interestingly, even when they are buying for investment, they tend to buy the same type of house designs.
“Most in their mid-thirties come looking for a three or four bedroom house depending on the size of the family,” she adds.
Young people below the age of 30 years have no problem snapping up apartments, with Kimutai saying that they make up for the highest consumers of studio houses.
“For some reason, they still want to live close to their neighbours, and privacy is not a major consideration for this group. Nevertheless, a mere apartment is not enough for them, for they want ‘what else comes with the package’.
"For example, does the apartment have a lift? Is there a swimming pool or a gym? What about internet services? Basically, their hunting is designed around an apartment that provides them with a fast-paced lifestyle,” she says.
Additionally, most young people tend to prefer living near towns, Kimutai reveals, mostly driven by the peer mantra of responding to the ‘where do you stay question’.
“The older age group is more interested in a place where they basically own the land — they love own-compound homes,” offers the property consultant.
Asked whether the market is responding to these needs, Kimutai answers in the affirmative, observing that there are several developers who are putting up apartments with these extra amenities, such as gated communities set ups.
One big difference Kimutai has noticed over the years that sets the older and younger generation apart is the fact that the older generation really understand the value of real estate.
“I think it stems from experience. The older generation know what they want and it is very hard to convince them otherwise. Most will actually come to you knowing what they want beforehand” says Kimutai.
But the young generation is indecisive. “If you ask a young person to put some money in real estate, promising some returns after a period of time, most will be sceptical,” the property consultant says.
“One is likely to ask you, “you mean if I put that money in unit trust I won’t make more money?” So, they usually have all these other options.”
She adds that for most young people, owning property doesn’t seem like the ultimate goal.
She is however hopeful most will come around when they learn more and appreciate the value of real estate.
With the country facing a backlog of over two million houses, a figure that calls for more than 150,000 units every year according to Kenya National Bureau of Statistics, the government is taking deliberate steps to provide housing.
Through the ‘Affordable Housing’ pillar, it intends to adopt the rent-to-own model to provide half a million affordable houses.
“For me this is a welcome idea. I have already registered and I am looking forward to seeing how they will price those houses,” says Watoro.
Among his friends, he says, he is also championing the idea of forming a chama with one goal in mind: to use it as a housing investment vehicle.