Kenya: While majority of individual Kenyans are firmly locked out of the mortgage market, purchases by institutions has shot up, a home ownership report has revealed.
The report shows a surge in buying by institutions and couples, with institutions accounting for 11.9 per cent of property purchases by 2012, compared with 6.3 per cent four years earlier.
There is also a marked shift towards buying by couples, instead of by men alone, with the proportion of properties bought by couples climbing to 19.5 per cent, from 4.7 per cent in 2007/2008.
These combined trends have delivered a position where men no longer buy the majority of properties in Kenya. In 2007/2008, men bought 64.1 per cent of all properties. Four years later, they accounted for just 41.2 per cent of buying.
This quarterly home ownership bulletin has been prepared by real estate advisory firm HassConsult, in partnership with Kenya Television Network’s (KTN) The Property Show.
“With mortgage rates putting buying out of reach for all except those on the country’s very highest salaries, one of the trends now clearly emerging is dual ownership in order to service repayments, as well as institutional buying,” said Nancy Muthoni, host of The Property Show and co-sponsor of the report.
AFFORD A HOME
“It’s a trend that further highlights the need to access cheaper housing finance if we are to achieve the targets set by government in moving any significant proportion of Kenyans into home ownership,” she said.
In assessing current mortgage rates, the report found almost no decline in rates since the end of July, despite the government’s efforts to get banks to move to lower rates pegged to the new Kenya Banks’ Reference Rate (KBBR), which is currently set at 9.13 per cent. Standard Chartered Bank continued to offer the country’s most competitive mortgage rate, at 12.3 per cent.
The sector’s high rates saw the average mortgage rate maintained at 16.02 per cent, which, combined with now renewed upwards movement in property prices, has served to further reduce the percentage of Kenyans able to afford a home of their own with a Kenyan mainstream home loan.
Since the sharp interest rate rises of 2011, the average monthly repayments to buy an apartment have stayed above Sh140,000 a month, despite the subsequent near halving in the Central Bank of Kenya’s base rate.
As a result, apartment purchasing remains beyond the reach of nearly all professionals; with mortgage repayments exceeding average salaries across pharmacists, accountants, architects, marketers and most other careers. Only executives and managements come close to earning the salaries necessary to reach current Kenyan mortgage repayments.
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