Challenges Contributing to Unaffordable Housing in Kenya

A Research Project Report Submitted to the School of Business in Partial Fulfilment of the Requirements for the Award of the Degree of Master in Strategic Management (MBA)The main objective of the study was to evaluate some of the relevant challenges that are contributing to unaffordable housing in Nairobi County. The study was guided by the following research questions: what factors impact potential buyers from purchasing property in the Kenyan Market? Which is the preferable method of financing by most of the property buyers? And who do real estate property developers target in the market? In this research, an exploratory research design was adopted. The study population consisted of a total of 50 apartments, this included gated communities and apartments within the specified regions from the targeted roads for data to be collected i.e. the target population consisted of property in the Kenyan market mostly along Mombasa Road, Kangundo Road, Thika Road and Langata Road. The study adopted a non-probability sampling technique. Data collection was by means of the attached questionnaires. Primary data collection was used and the data was coded and analyzed using the descriptive statistics, specifically mean, standard deviation to describe each variable under study. Coefficient of variation analyzed the variation of data. The Statistical Package for Social Science (SPSS) software was used to present the data in tables. The findings established that real estate developers prefer working with large banks for individuals willing to take up mortgages, buyer would prefer buying it on cash rather than taking up mortgages and high income earners are able to afford to take up mortgage, government policies have contributed to rise in lack of affordable housing. The results also established that factor affecting affordability of housing in regarding geographical region of properties was that rental houses are more near learning institutions and work places as opposed to guarded estate communities, residential developments being constructed currently are far from the CBD, and lack of available land near the CBD has led to real estate developers developing in remote areas. The main conclusion provided that financial institutions would prefer lending to salaried individuals as opposed to individuals without a steady income, real estate developers prefer building rental properties as opposed to properties for sale so as to be able to pay back the financial institutions, levies charged on mortgages affects loans uptake, and cash buyers are very few because of the high property prices. The study recommended that Real estate developers should work closely with Commercial banks in Kenya to provide mortgages at reduced interest rates. The developers should target both low and high income earners since most people prefer constructing their own home rather than buying an already constructed home. Rental houses should be constructed near learning institutions and work places as opposed to guarded estate communities. This is because majority prefer living next to commercial centers. There is a need to carry out a further study on the uptake of new construction methods in the country. The study suggests that future research could conduct a research factors that influence the cost of living across all counties as well as the preference on individuals preferring building their own property as opposed to taking up mortgages for already built structures. The study also suggests that future research could conduct a research on challenges of low-cost housing in Kenya. Low-cost housing is a potential area for further research studies in developing countries of the world