Recent measures by the Government have brought smiles back on the faces of real estate developers and commercial banks with the latter now recording increased requests for home loans.
A host of policy reforms and relief measures to support the country’s construction sector are now seeing to be paying off in an effort believed will go a long way in complementing affordable housing agenda under the Big FOUR agenda by the government.
Some of those measures include lowering of annual interest rates on home loans by nearly half the prevailing market rates to seven per cent by the National Treasury, through the Kenya Mortgage Refinance Company (KMRC). This has given the much needed boost especially for Kenyans earning below Sh 150,000 every month.
Equally, State has also made it easier for Kenyan’s to withdraw up to Sh 7 million or 40 per cent of their pension savings to purchase affordable housing units to boost sector activities.
“We see this helping to resolve liquidity issues in the real estate sector by off-setting COVID-19 related disruptions. Over the pandemic period, we have seen a shift in customer preferences on designs, with many first time home buyers looking for responsive homes and units that can help them to flexibly navigate emerging challenges like the pandemic and allow them to continue operating and live healthy,” says George Mburu, the Chief executive of Mizizi Homes.
Housing has become the first point of defense against COVID-19, according to Mburu who believes the sector has helped lessen the spread of the virus and has allowed a bigger population to continue powering the economy while at home.
Iverson Ongira, a real estate consultant believes that the fiscal year (2021-2022) should consider these dynamics as part of long-term preparation for unseen future pandemics and come up with housing policy reforms that advocate and support development of housing for the future.
“To further improve affordability, the government should also come up with ways of freeing up public land to private developers at subsidized cost or payable in a flexible long-term period. This will significantly reduce the cost of construction with the benefits set to trickle down to Kenyans and the prospective homeowners,” says Mr. Ongira.
Similarly, experts further wants the government to review VAT on construction materials – a key component that is felt could spur the sector’s growth.
Since the revision of the value added tax (from 14 to 16 percent) earlier in the year, the cost of key building materials have risen significantly and stand in the way of delivering affordable houses.
“A downward review of the VAT or revoking it entirely is welcome,” says Mr. Mburu.
The first quarter of 2020 saw the government of Kenya issue ministerial directives concerning social, health and safety requirements and impose curfews, travel restrictions and county lockdowns.
The move negatively impacted various property segments, including retail, commercial, travel, hospitality and leisure.
Kenya’s commercial property space witnessed a significant decline in office space absorption due to the disruption caused by COVID-19. The work-from-home approach employed to curb the spread of the virus has led experts to project a further decline in demand beyond the first quarter of 2021, as remote working is increasingly becoming a mainstream way of life.
Figures by Kenya National Bureau of Statistics (KNBS) released in June 2020 show that due to the ongoing pandemic many livelihoods were affected in a period that saw several lay-offs and redundancies, as thousands of Kenyans struggled to pay rent.
As a result of the relocations satellite towns such as Ngong, Thika and Kitengela provided safe havens for consumers looking to rent cheaper but decent housing and seeking to purchase affordable land within a reasonable distance from Nairobi.
The rise in demand for cheaper or more affordable rental options has also led to a high tenant turnover in high-end developments.
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