Construction of residential apartments in Nairobi could be a pointer that there is a growing appetite and demand for the units. I would be interested in knowing whether Nairobians have resorted to mortgages to buy the units as - I may be wrong - many do not seem to be cash buyers. I may be wrong but I assume that majority of people who buy houses on mortgage are the employed middle class.
Susan, Nairobi
Majority of the burgeoning middle class have dreams of owning houses to escape from the realities of the ever-growing rent.
It is not far from the truth that majority of mortgage home buyers are salaried Nairobians who repay in instalments via the popular check-off system - salaries deducted by the employer and sent directly to the financier.
However, mortgages are still not a walk in the park for many Nairobians following several factors ranging from the effects of Covid-19, high cost of property purchase, limited access to affordable long-term financing and low-income levels. There are also high incidental costs such as legal and valuation fees and stamp duty.
A recent report by the Central Bank of Kenya (CBK) has indicated that Kenyans have continued to give mortgages a wide berth with the figure of home loans dropping to 26,723 last year. The survey shows that the drop of 248 mortgage loans was in comparison to 26,971 in 2020.
The 2021 Residential Mortgages Market Survey is a pointer that from 2019, the number of Kenyans buying homes through mortgages dropped cumulatively by 1,270. The report further shows that the value of mortgage loans outstanding rose to Sh245.1 billion in December 2021 compared to Sh232.7 billion in December 2020. This was an increase of Sh12.4 billion (5.3 per cent). These figures are an indication that middle-class families are increasingly shunning mortgages compared to the rich.
However, all should not be lost as Government funding from Kenya Mortgage Refinance Company (KMRC) may increase mortgage uptake. KMRC was mainly established to refinance, and de-risk primary mortgage lenders including commercial banks, Saccos and microfinance banks to lend to homeowners at lower rates.
Nairobians may also be forced to consider moving to the outskirts of the capital city where houses may be more affordable - there could be some developers interested in low-cost housing.
Recent statistics from the Kenya National Bureau of Statistics (KNBS) paint employed Nairobians as 'career' tenants with 86.4 per cent of households living in rented houses.
Recently, Central Bank of Kenya (CBK) Governor Patrick Njoroge said that 99.3 per cent of bank accounts countrywide have deposits of less than Sh1 million. Conversely, this equates to approximately 350,000 Kenyans only who have over Sh1 million in bank savings - how can more Nairobians be homeowners?
According to recent wage distribution data by the KNBS, three-quarters of all Kenyans working in the formal sector are on a monthly salary of below Sh50,000.
- Harold Ayodo is an Advocate of the High Court
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