OPINION: Why affordable housing is a game changer

Home ownership in Kenya has generally been reserved for wealthy individuals with considerable disposable income and for bankers who have access to loans and mortgages at subsidized rates.

According to the most recent housing survey done in 2019 by Kenya Population and Housing Census (KPHC), a majority of these individuals have either built their homes away from cosmopolitan and upscale city centers such as Nairobi or have inherited homes from previous generations. Thus, the emergence of the need for affordable housing by the government is a welcome discussion and should be music to the ears of citizens around the country as it presents a great individual opportunity to develop assets, communities, eradicate poverty and to promote the economic well being of the country.

What is affordable housing? 

Affordable housing commonly insinuates that there are plans to develop adequate, standardized and well-spaced housing with continuous supply of clean water and electricity. These units are constructed with the intention of making house purchasing affordable for the mass market at bargain prices in comparison to regular market prices.

The term “zoning” is often associated with low cost housing because it is oftentimes used to refer to a broad set of regulations that govern the use of urban and suburban land. In addition, it also encompasses several overlapping concerns by making sure that everyone has a decent place to live and that people are also interested in ensuring that economic diversity exists in specific cities, metropolitan areas and community neighborhoods.

With successful implementation, affordable housing can play a crucial role in building capital and eradicating poverty if it is efficiently planned and effectively executed. It is also a great strategic angle for national progress because it encourages and empowers citizens through capital investment and eventual capital gain.

In doing so, the creation of wealth is facilitated for the public to take advantage of but can only be successfully achieved if the national government is able to provide subsidized financial aid that can realistically allow citizens to purchase a home through economical loans and unrestricted mortgages. Governments that have been successful at implementing this have done so by constructing payment models that are tailored to the average national income distribution.

A great example of this would be Singapore, who have the highest rate of citizen home ownership in the world. The Singaporian government used peculiar and unorthodox strategies to entice its citizens into owning homes by setting up a fund, which was then known as the central provident fund. Singaporeans were required to save part of their salary/income that would be directly remitted towards housing expenses.

This vision was not just tailored for the impoverished but also for the mass market. At the time of this publishing, over 1 million housing properties have been built and sold in Singapore and it is commonly revered to as one of the best models of affordable housing done in the world.

Models such as these are created with the vision of making home ownership a reality for the marginalised but that also provide a stepping stone for the reconstruction of suburban and metropolitan habitation. By diversifying and creating improved housing infrastructure, governments are likely to experience considerable growth that will open metropolitan areas to an advanced transportation network, increased safety and more streamlined outer/inner city expansions.

Why affordable housing?

Continentally, African countries are currently facing a housing crisis driven by high population growth, increased urbanization, poor urban planning, dysfunctional land markets, rising construction costs, squatting of informal settlements, and underdeveloped financial systems that are incapable of meeting market demands or unaffordable to a vast majority.

Implementing a low-cost housing agenda will create a ripple effect within the policies and systems of land and property in Kenya. There will be more legal frameworks that will be developed to help the ordinary citizen and to ensure that policies are followed in the right way for properties to be acquired. The acquisition of land and the development of housing will create a streamlined ecosystems that will benefit the people and the system.

The lack of affordable housing creates a problem that is especially severe because on average, the least-affordable cities are also the wealthiest ones. This means that unaffordable housing can lock people out of good job opportunities. Nairobi, for example, is a wealthy city with relatively high housing cost and this therefore creates a negative community bubble of opportunity to be marginalised for the few that have the chance to live in or within the city.

Consequently, the expensive nature of home ownership filters out those that come from rural areas or humble backgrounds but decide to pursue jobs in the inner city. Under these circumstances, there are a majority of the population who opt to rent homes in congested, remote and sometimes inhabitable areas of the city. If this is progressively practiced for centuries, then slums and low quality housing options are built to cover the cracks and not to create a lasting solution.

Countries today are part of international treaties such as the universal declaration of human rights, that constitute equal access to property as one of the fundamental rights of humankind. However, authorities that govern these countries have not been reticent in giving the marginalized an equal opportunity to access the ability to property rights. If this is used as an example, the process of property ownership has accumulated billions of shillings in expenditure over the past decades and for a long time, individuals with the lack of access to loans and mortgages have unendingly relied on social capital, communal trust and bribery to acquire land or purchase a home.

This has led to an underground ecosystem where emerging black markets and underground economies lead to illegal frameworks that exclude the government. This loss of government involvement cascades into a loss of potential revenue income and subsequently contributes to a lack of national growth and a stale land and housing infrastructure system.

What should be done

If this agenda is to succeed, political differences must be set aside and the interest of the people must be the number one influence and interest for the development of the country. People will learn to live in more habitable environments and will demand for better living as a result of improved standards of living. Emancipating the underprivileged is a key driver to enhancing the economy especially in the case of a country like Kenya which is largely driven by an informal sector.

Until recently, good affordable housing had become a distant dream for first time employees, entrepreneurs and low income earners. According to figures published by Organisation for Economic Co-operation and Development (OECD) countries, home prices have substantially increased over the past 20 years, especially rental prices.

Part of the reason is that supply has not been able to keep up with demand, the concept has not been existent or introduced. Better housing policies directly correlate with better lives and living conditions. It is this same reason that realtors in Kenya will mention that there are a significant amount of rental units available but very few individuals with the capability to purchase.

The cost of land and manufacturing have remained high, thus creating key obstacles to the realisation of affordable housing, even as investors clamour for low-cost building materials. The high cost of production has a direct effect on property development, slowing down efforts to make houses affordable. The cost of electricity is also among the major impediments hindering the ease of doing business and a major concern for manufacturers.

In order to realise this dream, the key stakeholders need to scale to see the benefits of adrenals housing, partner with financial institutions who are willing to lend, invite foreign and seasoned real estate investors to the fore and most importantly, construct products that appeal to the market and are affordable for purchase.

This will eventually lead to cleaner cities, growth, improved standards of livings, aesthetically appealing infrastructure and burgeoning potential for capital gain from the grassroot level.

The writer, Kagwe Kibugu, is a Senior Relationship Manager, Equity Bank Limited

DISCLAIMER : The opinions shared in this article are my own and do not represent those that are expressed by my employer.