D-Prize Evidence – Impact of and Need for Affordable Housing

Impact on Housing

The ABCs of Affordable Housing in Kenya by Acumen Fund

"Access to affordable, quality shelter brings many additional, often overlooked, benefits. In addition to the improved structure itself, there is the obvious benefit of financial security—in many cases the new homeowner now has an asset that is far more secure and valuable than any asset they have ever owned. However, no less significant are the proven health benefits of this new home. Disease thrives in the unsanitary, crowded conditions of slums and tenement housing, and unsafe and unhealthy physical structures are the norm. By providing a home to a low-income family, you not only provide an improved living space, but financial security, better health, safety, and the dignity of owning one’s own home."

Affordable Housing as a Method for Informal Settlements Sustainable Upgrading by Adel El Menshawy in the Procedia - Social and Behavioral Sciences Journal

"The housing sector plays an important role for family stability and income growth… The impact of the housing sector has a direct effect of low and middle households."

Incentives in the Housing Sector by the Government of Kenya

"Housing is a basic human need that is recognized globally as a human right…In fact, housing is one of the principal sectors that would revitalize economic growth in Kenya with shelter being recognized as one of the tools of development… Investment in the sector has a multiplier effect of 7 to 9 times on Kenya’s economic development. What this means is that one shilling invested in housing development would generate seven shillings in the economy. Other direct and indirect benefits from a functioning housing market in a country include employment creation, increased tax base, reduced expenditures on Health, improved Security, socially cohesive and patriotic societies and improved quality of life. An adequately housed population is also more productive and has a sense of national pride."

Kenya Needs 2 Million More Low-income Homes: Building Them Would Boost Its Economic Growth by the World Bank

"Numerous benefits can be attributed to improving access to housing finance, including economic growth, job creation, and deepening of the financial sector. There are various global examples supporting the “housing multiplier effect” as every dollar spent directly on a housing unit results in various indirect benefits to the country."


The Need for Affordable Housing

The ABCs of Affordable Housing in Kenya by Acumen Fund

Twenty-two percent of Kenyans live in cities, and the urban population is growing at a rate of 4.2 percent every year.2 With this level of growth, Nairobi requires at least 120,000 new housing units annually to meet demand, yet only 35,000 homes are built, leaving the housing deficit growing by 85,000 units per year. As a result of this mismatched supply and demand, housing prices have increased 100 percent since 2004.3 This pushes lower income residents out of the formal housing market and into the slums.

African Housing Dynamic: Lessons Learned from the Kenyan Market by Africa Economic Brief

"As of 2012, Kenyan population growth is estimated at 4.2% per annum. Based on this growth and the rate of urban migration, the yearly annual increase in demand for housing in Kenya is of 206 000 units annually of which 82 000 in urban areas. In 2011, the ministry of housing estimated that the formal supply of houses to the market reached 50 000 creating a 156 000 shortfall which added up to the 2 million units existing backlog. In 2012, it is estimated that further 85 000 units were also added to the backlog."

The Challenges of Housing Development for the Low-Income Market – Kenya by Mungai Eliud Njathi from Strathmore University

The overall demand for housing according to a UN Habitat survey is 150,000 housing units as compared to 35,000 housing units being delivered in the market. The supply shortage has left private developers focusing on highest return market segments which are the upper income class.

Housing Finance in Kenya by the Centre for Affordable Housing Finance in Kenya

"On the demand-side of the Kenya’s housing market, as the economy and urban population expand, a matter of grave concern still remains affordability… Accordingly, HassConsult presents that the all property average asking house price is Ksh 31.1 million (US$ 306 193), while sellers of four to six bedroom houses were asking for Ksh 46.7 million (US$ 459 781), on average, whereas those selling one to three bedroom houses recorded an average asking price of Ksh 14.1 million (US$ 138 820) by the end of the second quarter of 2016. Given these high house prices and noting that the prices are still on a generally upward drift, the burgeoning question is: What proportion of Kenyans would afford such houses? For a prospective buyer to qualify for a Ksh 14.1 million (US$ 138 820) mortgage at the average interest rate of 17.45 percent, such buyers must be able to pay about Ksh 170, 000 (US$ 1 674) per month. To make this payment, the monthly income of the buyer must be at least Ksh 300, 000 (US$ 2 954) per month, assuming a restrictive loan-to-income ratio of 55 percent. This is beyond the income of over 99 percent of Kenyans, including the middle-class[1], highlighting the affordability challenges facing buyers."

Kenya Needs 2 Million More Low-income Homes: Building Them Would Boost Its Economic Growth by the World Bank

Kenya is targeting "200,000 housing units annually for all income levels. However, the production of housing units is currently at less than 50,000 units annually, well below the target number, culminating in a housing deficit of over 2 million units, with nearly 61% of urban households living in slums. This deficit continues to rise due to fundamental constraints on both the demand and supply side and is exacerbated by an urbanization rate of 4.4%, equivalent to 0.5 million new city dwellers every year."


Concrete as an Alternative Construction Material for Affordable Housing

Construction of low cost houses in informal settlements A case study of the Nairobi region by David Kvarnström of the Chalmers University of Technology in Sweden

"As stated by Mungai (2013), neither wood nor steel are generally any alternatives in construction in many regions of East Africa. This calls for better, more material efficient concrete designs. The use of concrete plate elements for flooring is becoming more established, thanks to many advantages. The general technique is based on relatively small sized concrete plate elements, manually laid on top of floor beams, and then covered by a layer of mortar or concrete."


The Fire Resistance of Concrete

Fire and Concrete Structures by David N. Bilow of the Portland Cement Association

"One of the advantages of concrete over other building materials is its inherent fire-resistive properties… Concrete’s excellent fire resistance has been proven by many tests performed for over 60 years."