NHC to build 7k low cost houses in Nairobi
Most city residents say that getting an affordable house to buy is a pipe dream. Most of the houses on sale go for more than Sh3 million.
However, their dreams of owning a home may come true after the National Housing Corporation last week announced it would build 7,000 low cost houses on Thika Super Highway and Mombasa Road.
Affordable
Out of these, 3,000 houses will be on Thika Road while 4,000 houses will be built on Mombasa Road.
NHC managing director Wachira Njuguna said the houses will be one bedroom apartments and will be sold for as low as Sh2 million.
“Our target market are people in the lower and middle market segments who want to access decent housing at affordable prices,” Mr Njuguna said.
With these kind of prices, and at NHC’s flat interest rate of 13 per cent, a buyer will pay about Sh25,304 monthly instalments for 15 years.
Availability of low cost financing is a problem to many developers due to high mortgages, in spite of the Central Bank of Kenya’s benchmark lending rate being set at 8 per cent.
“The demand from the public should be enough to show the banks that the market is ripe. But when you see a scenario where the rates are almost twice the benchmark, then it means that we cannot supply the right number of houses to address the deficit,” said Sue Muraya, chief executive of Suraya Property Group.
She said mortgages were extremely high compared to the incomes of a majority of Kenyans.
“These costs aren’t just punitive to home buyers but are also high to developers who in the end have to pass them on to the buyers,” she said.
“We packaged various models that allow everyone to own a piece of real estate. We have developed homes for as low as Sh900,000 within our Sucasa models in Mlolongo consisting of bedsitters, one and two-bedroom apartments targeting young home buyers.
“We also have other houses that go for as low as Sh2.1 million,” she said.
The recently released HassConsult first quarter report showed that there was an increasing demand for low cost housing as developers and financiers begin to shift their attention to this segment of the market.
High construction costs coupled with the high interest rates have for a long time seen developers shy away from building houses for these segments but many are now shifting focus to this market with one bedroom apartments and bedsitters in the city and its environs.
Carol Kariuki, the Mortgage Company’s managing director said the focus on the lower end of the market was a natural shift by developers to generate a new income stream.
“The next market is the lower end of the pyramid. Many developers have realised that there is money in the numbers,” said Kariuki.