Millennials to play integral role in housing sector recovery
Homeownership among Kenyan millennials in their mid-20s to late 30s will play a key role in the recovery of the housing market in the post-pandemic period, according to property developers.
Interestingly, George Mburu, a real estate specialist, says that this group is beginning to have an even more considerable influence than older generations when it comes to home purchases – a new market trend that is widespread in the developed markets like Canada and the US.
“We have witnessed an interesting trend during this pandemic period where more transactions are happening among people below the age of 40 years and we believe this is a unique shift that will be more popular even after the pandemic,” says the 33-year old Chief executive of Mizizi Africa Homes.
Over the years homeownership has continued to elude the majority of millennials and singles owing to various factors such as high mortgage loans, tough economic conditions as well as personal preferences which have contributed to the low homeownership rate in the Kenyan history.
But that is fast changing now according to Mburu who says that few more millennials are buying a place of their own with a growing number equally saving towards such goals.
“It is common today to see a 30-year old living in their own homes, this was a rare thing a decade years ago, and this is just a reflection of how far we have come and fast the industry has been evolving,” says Mburu, who attributes the new shift to availability of disposable income among this group, recent adjustments to regulations on mortgage loans as well as crucial lessons offered by the coronavirus that has seen a host of millennials continue to work from home.
The term Millennials is usually considered to apply to individuals who were born after 1980 – a generation that is also quickly becoming highly educated with a good number having gone past their undergraduates with the right mind-set and exposure on investment options. Over the years the real estate sector has turned out to be an attractive vehicle for this age bracket.
Kenya’s demography is slanted towards the millennial and out of the country’s current 51.39 million people, the youth form a solid 35 per cent with majority of those living in rentals.
“I think this period (coronavirus pandemic) showed me just how important it is to have your own place and it doesn’t have to be close to my work station. I have begun a savings’ plan for myself already and hopefully I will be able to have enough to jumpstart those plans with the help of a mortgage financier,” says Iverson Ongira, an aspiring homeowner in his early thirties.
Recent gazettement of amended mortgage loans regulations, is also felt will help unlock more home-ownership opportunities for singles and married couples and create a pool of ready cash for developers to help fix the country’s housing gap.
“This condition offers a window of relief to couples especially those with low earnings joining homeownership much earlier through a combined effort and could significantly accelerate efforts of bridging the housing gap by challenging developers to meet a rising demand for houses with ready financial resources,” he said.
The Retirement Benefits (Mortgage Loans) (Amendment) Regulation, 2020 states that where a member and the member’s spouse are both members of the same scheme or different schemes, the trustees shall prescribe in the scheme rules the manner in which the member and member’s spouse may combine their accrued benefits and utilize the total amount for the purchase of a residential house.
The amended regulation has pegged the proportion available for the purchase of a residential house at the time of the application to a lower of 40 per cent of the member’s accumulated benefit subject to a maximum of Sh7 million or the purchase price of the house.
Similarly, it allows an applicant who is a member of more than one scheme that have been established by the same sponsor, the trustees shall, on the option of the member, combine the member’s accrued benefits in determining the proportion available to the member.
Kenya has an annual housing demand of 250,000 units with an estimated supply of 50,000 units, culminating in a housing deficit of 2 million units, or 80 per cent deficit.
It is estimated that an average price for a 1-3 bedroom residential property would fetch about Sh 14.4 million (US$140,666) or more, while the average price for a 4-6 bedroom residential property would cost you over Sh 39.1 million (US$ 381,948) with most property purchases are for cash these days.
786 total views, 2 views today