The argument for affordable housing has long been a social one, framed in the context of key global agreements such as the Sustainable Development Goals (SDGs). More recently, it is also becoming an economic one.
The entire affordable housing ecosystem — developers and builders, architects, property managers, and those in law and finance, stands to benefit from creating and preserving this stable asset class, and, hence, benefit the economy.
Those living in affordable housing are able to spend substantially more on food and on healthcare. This has an effect on local microeconomic activity, as more and more shops, restaurants, and healthcare facilities are open to service these areas.
Building, preserving, and sustaining affordable housing requires a host of construction tradespeople, property managers, leasing agents, security staff, and others to work together in ensuring that the final product is for the better good.
That is just the beginning, as local businesses are necessary to provide this workforce with needed resources, from food to fuel, restaurants to recreation and so much more, spurring even more hiring.
Smart developers can leverage these increases in commerce to create opportunities to provide more housing for employees and attract more business to the area.
The next frontier for the growth of affordable housing in Africa is to build the investment argument because this argument will ultimately shape the potential for affordable housing at the scale required.
Provision of affordable housing is one of the key development priorities of the Kenya government under the Big Four Agenda. This agenda seeks to provide 500,000 new affordable houses by 2022.
But affordable housing faces several challenges including funding and the client’s abilities to pay. Helping people buy a home is one of the most important roles we play in society. A home provides shelter and dignity for families and provides an opportunity to build intergenerational wealth.
According to Stanbic Bank, housing affordability is a function of three things: household income, the price of the house, and the terms of the finance.
Kenya’s banks are still the main providers of mortgage financing with 77.5 percent of all mortgage lending originating from only six banks out of 43 financial institutions in the country.
Most financial institutions are reluctant to expand their mortgage portfolios because of limited access to capital markets and collateral requirements which make mortgages exceedingly expensive. This explains the number of registered mortgage loans standing at only 26 187 in Kenya as of December 2017.
It is estimated that Stanbic Kenya serviced 16 percent of the mortgages financed by the banking sector in 2017.
“Stanbic strives to ensure growth in mortgage loans on offer with a focus on the provision of products aimed at making first time homeownership possible,” said Stanbic in their recently released report.
As of 2019, 78 percent of all mortgages issued by number were to first-time homeowners, 30 percent were issued to first-time female homeowners. By value, these loans issued equated to nearly half of the order book at 45 percent, with 17 percent of the value being issued to first-time female homeowners.
Stanbic Bank has the 105, 100, and 90 percent loan offerings. The 105 and 100 percent are meant for salaried individuals with a minimum gross salary of 100,000 shillings. The repayment does not exceed 50 percent of the salary and comes with a free cover limit of 30,000,000 shillings or less. It is available in local currency.
The 90 percent finances up to 90 percent of the value of the property or the sale price, whichever is lower and is applicable to salaried and self-employed individuals Available to both local and diaspora customers Available in all major currencies.