High cost of land, materials stall affordable housing dream

Set of construction materials and tools. [iStockphoto]

Pan African housing company Shelter Afrique has cited the increasing prices of construction materials such as steel and cement as a key barrier to achieving affordable housing in the continent.

Shelter Afrique acting Managing Director and Chief Financial Officer Kingsley Muwowo said the Ukraine-Russia conflict and the Covid pandemic have resulted in a sharp rise in prices of critical construction materials.

Russia is considered the fourth-largest steel exporter globally and serves over 150 countries.

“Prices of building materials have increased and continue to do so, a burden that the homeowners will ultimately share,” Muwowo said.

He explained that in the built environment, the conflict has exacerbated and exposed the dangers of overreliance on importing construction materials.

Mr Muwowo said the price of steel and nails in Kenya, for instance, has significantly shot up over the past few months with steel bars going up between 80 per cent and 90 per cent and nails inflating by between 13 per cent to 43 per cent.

Additionally, the conflict has resulted in a shortage of coal, which is a crucial source of energy in cement production through clinker manufacturing resulting in price hikes.

When these recent challenges are combined with the ever-high cost of land on the continent, the possibility of many being provided with affordable housing becomes a mirage.

Speaking on Delivering Affordable Housing Across Continents at a special session of the 11th World Urban Forum held between June 26 and 30 in the Polish city of Katowi, Muwowo called on governments to address the issues of rising costs of land and construction materials, which were hindering efforts to fast-track the provision of affordable housing globally.

“From market studies, the cost of land should constitute between 10 and 15 per cent of the total cost of a housing unit for it to be affordable, but this isn’t the case in many countries,” he said.

In Kenya, for instance, the cost of land makes up between 40 and 60 per cent of the total cost of a housing unit, like the case with Nairobi which is the most expensive in the entire continent of Africa.

“How do you deliver affordable housing when you’ve got the most expensive land? So if we don’t address the issues around the land, we will not be able to effectively tackle the issue of affordable housing,” said Muwowo.

Housing Principal Secretary Charles Hinga, during an interview with a local media house, also lamented the high cost of land.

“You cannot have affordable housing and the most expensive land in Africa in the same sentence,” he said. “There is a study that shows Nairobi has the most expensive land in Africa.”

To counter this, Mr Hinga said the government – which owns the largest portion of land in the country – opted to give its land.

“Unfortunately, in some cases, this land has been grabbed,” he said adding that huge chunks of land also belong to parastatals like Kenya Railways which was sitting idle. “When you try to think what they are doing with that land – there is nothing.”

Mr Hinga noted that when calculations were done, it was found that land contributed 40 to 60 per cent of the entire cost of construction.

“When you look at other economies that have been able to sort out the issue of housing, land makes about 10 per cent,” he said. “We (government) said if we cannot sort out the issue of land, we cannot then have affordable housing.”

“As much as we want to do 500,000 units, you first must address the systemic issues. Perhaps of the Big Four Agendas, this (affordable housing) was the most complex.”

It is this that led to the development framework passed by Cabinet where housing units will be put up on public land to ease costs.

“That is massive,” he said. “It means by that one decision, we wiped out about 40 per cent on average on the total cost of development.”

Mr Muwowo also decried the rising construction cost which he blamed on old building codes, punitive tax regimes, and the high cost of financing such projects in various countries.

The World Urban Forum (WUF) is a global event on sustainable urbanisation convened every two years by the United Nations Human Settlement Programme (UN-Habitat).

It was established in 2001 by the United Nations to examine rapid urbanisation and its impact on communities, cities, economies, climate change and policies.

The first WUF was held in Nairobi, Kenya in 2002 and has been held around the world ever since.

Speaking at the same event, European Investment Bank Vice President Prof Teresa Czerwińska said the rising cost of housing in many cities across the world was a major concern for the global lender.

“We have managed to make education and healthcare relatively cheap and accessible by putting in place proper policy interventions. Housing is a fundamental human right and we can apply a similar framework in ensuring housing remains affordable and available,” Prof Czerwińska said.