Report: Kenya has housing deficit of 2 million units

Amara Ridge in Karen, Nairobi, is one of the high end housing units constructed by Cytonn Investments Company. PHOTO | FRANCIS MUREITHI | NATION MEDIA GROUP

What you need to know:

  • Statistics at the National Housing Corporation indicates that the country can only supply 50,000 units per annum.

  • According to KNBS, the informal sector employees make approximately 83.4 per cent of Kenya’s workforce.

Kenya has a housing deficit of 2 million units, a leading investment company in the country, Cytonn investments says in its latest market report.

According to the company, the housing demand in the country has been growing at a rate of 200,000 units per annum.

Statistics at the National Housing Corporation indicates that the country can only supply 50,000 units per annum.

But even with the dismal supply, the Ministry of Housing indicates that 83 per cent of the existing housing supply targets the high income brackets earners and upper middle income segments.

This leaves millions of home seekers in the lower middle class segment scrambling for the 15 per cent while the low income earners fight for a paltry two percent.


The government, through its ambitious Big Four Agenda, has singled out affordable housing as one of its key pillars to drive the economy to double digit growth.

The government seeks to deliver 500,000 units by 2022 which will see cost Sh600,000 and Sh3 million respectively.

The move by the government is aimed at providing about 75 percent of Kenyans earning below Sh50,000 per month with affordable units.

However, according to Cytonn Investments, financing for end-buyers towards the purchase of affordable housing remains a big challenge in Kenya.

One of the major impediments is the tight financing structures available for the first time buyers to access capital towards their unit purchase.

According to the 2015-2016 Kenya Integrated Household Budget Survey (KIHBS), only 26.1 percent of Kenyans living in urban areas own the homes they live in.

This is in comparison to countries such as South Africa with 53.5 percent ownership.


Cytonn Investments attributes this to the unaffordability of housing units in the market.

“Those who own homes rely mainly on savings and other sources of financing including mortgage loans, bank loans and local investment groups commonly referred to as chamas and savings and credit cooperative societies (sacco),” said part of the report.

The report also says that access to housing finance in Kenya remains a big challenge due to low income levels that cannot service a mortgage.

According to Kenya National Bureau of Statistics (KNBS), only 2.9 per cent of Kenyans earn above Sh100,000 per month.

The increasing property prices boosted by the demand and supply forces is another factor that is hindering millions of Kenyans from affording a home.

According to KNBS, the informal sector employees make approximately 83.4 per cent of Kenya’s workforce.

However, due to insufficient credit risk information and lack of capital markets funding, which tend to be long term, many Kenyans have been unable to purchase housing units.

High interest rates, stringent deposit requirements coupled underdeveloped mortgage market for loans, this has seen many potential borrowers locked out.


According to Central Bank of Kenya, there were only 26,187 mortgages in Kenya as at December 2017 out of an eligible population of 23 million people with the mortgage to Gross Domestic Product standing at 2.7 percent.

To increase homeownership, the government has introduced policy and fiscal reforms such as tax relief on interests paid to lending institutions of up to a maximum of Sh300,000 per annum.

Other measures include Home Ownership Savings Plan where subscribers enjoy tax rebates of up to Sh96,000 per annum for prospective home owners’ savings with a registered home ownership saving plan for a maximum of 10 years.

The National Housing Fund which allows mortgage and cash buyers to save towards the purchase of an affordable home through Home Ownership Savings Plan.

Tax relief of 15 percent up to a maximum of Sh108,000 per annum and exception of stamp duty for first time home buyers are some of the reforms the government is banking on to ensure Kenyans have affordable housing.

The formation of Kenya Mortgage Refinancing Company is seen as another incentive the government has introduced to make the ownership of homes in the country affordable.