What a year it has been, all 2 months of it albeit!
So we kicked off the Citizen Business centre on the 19th of February, basically a centre that discusses all things money. The show airs every Wednesday at 9pm on Citizen Television.
First Wednesday we talked housing, in specific, mortgages and the deep hole it has thrown a number of Kenyans into.
In the backdrop of a housing sector that was left to the Private Sector after the Bretton woods institutions convinced the government to opt out of housing, affordable home ownership became a myth. The markets run free and millions of Kenyans who would have benefited from an otherwise clear government housing plan were left out. Jericho, BuruBuru and all the other government or PPP programmes disappeared with the 80's.
So Mortgages came to create a solution, but for many, became a curse. Truth be told however, Mortgage in itself is not hell, but understanding how to make it work for you within the interest rates available has been the biggest challenge for Kenyans.
We drew a chart showing monthly payments ranging from 2 million to say 15 million shillings at an average rate of 18% and did an amortisation that showed how much one ends up paying should you stick to the minimum payment plan.
Startling figures, which however can be managed by taking a long term mortgage plan and paying in the shortest time possible, if not one could end up paying unto 3 times the original cost of the home. However, the cost of the house would most likely appreciate over the years,to way above what you pay for. In retrospect, that's exactly how property dealers have made a killing in recent years, so there's a sigh of relief somewhere there.
The discussion was driven by the MD of National Housing Corporation Wachira Njuguna, the CEO of Home Afrika, Njoroge Ng'ang'a and the Head of Mortgages and Personal Banking at Jamii Bora bank, George Adulu. As we set the pace of the conversation, it was pretty clear that the housing market as it is currently has locks out millions of Kenyans, leaving only little breathers through construction of your own house or renting until Jesus returns.
The blame game between Government, Banks and Developers was glaringly obvious.
While Kenyans blamed the banks on interest rates, Developers blamed the government on cost of construction and lack of amenities such as roads and sewerage which push up the cost of building homes, while to NHC, questions were raised about the reality of building affordable homes as well as accusations of corruption and nepotism in allocation of the so called affordable homes.
So can housing be really affordable? How can a country of 40 million people have just about 21,000 mortgages? Could there be alternative financial products that are financing mortgages that have not been included in the system? How many Kenyans really own their own homes? Has the Government absconded in it's duty to provide Kenyans with affordable homes, who is taking these expensive mortgages and how are they paying for them?
In looking for solutions: Can NHC be turned into a fund reminiscent of Freddie Mac and Fannie Mae? Can our socially nurtured perceptions change to allow us to build prefabricated homes which are more affordable? Can the housing market be regulated?
These are just a few of the questions we sought answers to at the Citizen Business Centre.
In other news, I visited the Koto Housing project being spearheaded by Moses Nderitu. The house is to to take 14 days, start to finish. I am so curious and waiting for Open day to go see the final product, another solution for affordable housing, ground breaking if you ask me.
so.. If you missed any of the past few shows, Wednesday is date. See you then, at 9pm.
You can also follow me on twitter and instagram @terryannechebet for updates of that and all other discussions on the Business Centre and more.
I'll be sure to watch you on Wednesday Terryanne.
ReplyDeleteHousing is of much interest to me too. I think our version of the American dream the "Kenyan dream" of an SUV, an apartment and two children has really driven up land and housing prices.
But on the flip side... the good side it is also driving technology - I have been watching some from NHC and Zenith Steele which could help individuals build houses/bungalows for less than KES 3million
Many people fear banks because many can't fathom having steady incomes to make regular monthly payments for 10 years - and given that even in year 9, the bank auctioneers may come calling, if they default. So they end up buildinh houses in stages that match their cash positions - buying materials and having short term crews - it takes longer, and costs more to build, but it suits them (like buying pre-paid airtime)
ReplyDeleteFor the more organized, SACCO's are where a lot of home finance happens - under other names like capital loans (some can get up to Kshs 10 million, at lower rates than banks) or with a series of personal loans to build a house in stages
im working on reviewing the substitutability of steel prefabricated houses to the conventional. interesting findings on the state of housing in +254. i shall Cc you a copy.
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