Survey reveals housing project has missed the mark, is doomed to fail

 

The Kenya National Bureau of Statistics (KNBS) released the findings of the Kenya Housing Survey for 2023/24 this week. The survey was commissioned early last year, just days before the Housing Levy was formalised in Parliament and signed into law. Before this, the last comprehensive national housing survey had been conducted in 2011/12.

When the Kenya Kwanza administration launched the Affordable Housing Programme, there was no recent official data on the country’s housing needs. The only available data came from limited reports by private sector actors. This highlights a recurring issue in the policymaking environment: the initiation of programmes and projects without sufficient evidence, often driven by the private commercial interests of those in power and their associates.

Now, let us examine the survey’s findings and their implications. Ironically, the primary objective of the survey was to provide up-to-date housing statistics to support evidence-based planning and decision-making in the housing sector. But from an analytical standpoint, there is a risk that the findings may have been adjusted to fit a predetermined narrative. This concern arises because the survey was commissioned after the introduction of the Housing Levy, which remains deeply unpopular to this day.

Nonetheless, the findings appear to validate the concerns raised by many vocal experts who have criticised the housing programme and the associated Housing Levy. As the saying goes, numbers don’t lie. According to the report, data collection occurred between March 7 and May 10, 2024. Notably, the Housing Levy Bill was signed into law on March 19, 2024.

The survey reveals that the majority of homeowners are in rural areas, where homeownership stands at 85.5 per cent. In contrast, urban homeownership is much lower, at 22.8 per cent. The proportion of individuals living in rental housing is 72.3 per cent in urban areas and 8.9 per cent in rural areas. The most preferred type of house is the bungalow, with preference rates of 76.3 per cent in rural areas and 69.1 per cent in urban areas.

Among homeowners, the majority have durable floors (58.9pc), durable walls (47.2pc) and durable roofing materials (93.6pc). The survey also highlights notable improvements in access to utilities, including water, clean cooking energy and toilet facilities. Regarding the government’s Affordable Housing Programme, 53.5 per cent of respondents were awarene of the initiative.

So, what are the policy implications of these findings?

To fully understand these findings and interpret them accurately, it is essential to compare them with data on the actual performance of the housing programme itself. Currently, the centralised platform for the housing programme, the Boma Yangu website, reports approximately 300,000 registered members. However, only 10 per cent of these members are active savers. This raises a key question: If the majority of people are aware of the housing programme, why are so few willing to register or save?

According to the website, members must first meet eligibility criteria to participate in the housing programme. They must also save at least 10 per cent of the selling price of their preferred housing unit to qualify for participation in a fair allocation process.

Studio-type units

Among the listed ongoing projects, the cheapest available housing units are studio-type units priced at Sh640,000. These are located in rural-oriented townships, primarily in counties such as Machakos, Kajiado, Wajir, Murang’a, Nakuru, Vihiga, Uasin Gishu and Nandi, among others.

For these units, buyers are required to pay at least Sh3,900 per month in rent-to-own arrangements. This translates to a repayment period of 165 months (13.7 years), assuming the buyer does not utilise the available mortgage facility. Additionally, buyers must have saved at least Sh64,000 to qualify for participation in the programme.

At the upper end, the most expensive units listed are three-bedroom houses priced at Sh5.76 million. Under the tenancy purchase service agreement, these units require a minimum monthly payment of Sh41,880. The repayment period for these units is 137 months (11.5 years), again assuming no mortgage facilities are used.

The foregoing information is critical for understanding the findings of the housing survey. Based on the location of the ongoing projects, it is apparent that there is a huge disconnect between housing demand and supply, as highlighted by the homeownership and housing preference data in the survey.

Consider, for instance, major towns that have recently attained city status, such as Nakuru and Eldoret. Anyone familiar with these towns will confirm that they are bustling with activity during the day but become noticeably quiet by 8pm as the majority of people retreat to their homes in surrounding villages. For residents who can afford homes, many already own houses—predominantly bungalows, as reflected in the survey—or have purchased plots in the outskirts, where land is relatively affordable.

Unlike cities like Nairobi and Mombasa, these towns do not struggle with traffic congestion. This allows aspiring homeowners to explore more distant, affordable plots in neighbouring villages. For example, in my hometown of Machakos, town residents often buy plots and build homes up to 20 kilometres away along key roads leading to areas like Kitui-Machakos, Wote-Machakos, Kangundo-Machakos and Nairobi-Machakos.

As a result, Machakos town transforms into a ghost town as early as 8pm. By 8.30pm, finding an open eatery is a challenge, with the exception of nightclubs and the recently opened Galito’s fast food outlet. I have visited nearly all major towns in the country, and the situation is no different from that of Machakos.

The findings of the housing survey effectively spell doom for the ongoing projects within these townships. This is even more evident when considering the cultural aspects surrounding homeownership in many communities. For instance, in the Western and Nyanza regions, a respectable man must own a ‘Simba’ to earn a seat among the elders. Similarly, among the Akamba, a man is defined by the quality of his house and is never expected to take his wife to his father’s house for the night.

To further interpret the survey findings, we must also consider data on employment, household incomes and the gross domestic savings rate. Various sources show that national savings rates have stagnated at 11.9 per cent since 2010, the first time they reached this peak. In both 2022 and 2023, savings remained at this same level, reflecting no change in the consumption or saving habits of Kenyans for nearly 15 years.

Annual economic surveys consistently report that less than 400,000 employed Kenyans earn over Sh100,000 per month, while more than 75 per cent of those in the formal sector earn Sh50,000 or less. This makes the proposed tenancy purchase service rates for 2-3 bedroom houses unattainable for the majority of Kenyans. Those who can afford such rents likely already own bungalows or have plots at various stages of development.

If evidence truly matters in policymaking in this country, it is time for President William Ruto to reconsider and abandon this ill-fated programme. He should also apologise to Kenyans for terrorising their payslips!