Critical factors affecting affordability of mortgage housing in Kenya
- 204 Downloads
This study investigated factors affecting affordability in the mortgage housing sector in Kenya. Housing affordability is a major problem experienced by urban households in Africa. According to the African Development Bank (The middle of the pyramid: Dynamics of the middle class in Africa, market brief, 2011), only three per cent of the entire African population can afford a mortgage. In Kenya, the Centre for Affordable Housing Finance in Africa has estimated that only eleven per cent of urban households earn enough to support a mortgage. Attempts were made in this study to develop an empirical model to reveal the underlying factors affecting housing affordability in Kenya. Applying a multiple regression approach, the model identified that affordability of mortgage housing in Kenya is significantly driven by clusters of factors related to the households’ social-economic factors, property attributes, loan characteristics and the macroeconomic environment. Specifically, the interest on mortgage, number of households’ dependents, loan-to-value ratio, type of mortgage instrument, number of income earners in a household, real gross domestic product per capita and size of household are the critical factors affecting affordability with the greatest contribution to the affordability problems of households in the mortgage housing sector in Kenya.
KeywordsHousing affordability Critical factors Mortgage housing sector Kenya
- African Development Bank, (2011). The middle of the pyramid: Dynamics of the middle class in Africa, market brief. Available at www.afdb.org. Accessed on March 27, 2014.
- Bujang Z., Zarin, H. A., & Jumadi, N. (2010). The Relationship between demographic factors and housing affordability, Malaysian Journal of Real Estate, Vol. 5, No.1.Google Scholar
- Central Bank of Kenya. Bank Supervision Annual Report, 2012, 2013, 2014, 2015.Google Scholar
- Centre for Affordable Housing Finance, (CAHF). (2013) in Africa. Housing Finance Year Book.Google Scholar
- Chirchir, J. S. (2006). Promoting home ownership using retirement benefits, Research Paper Series 01/2006, Retirement Benefits Authority, Nairobi, Kenya.Google Scholar
- Cohre, (2008). Violations of women’s housing rights in Kenya’s slum communities. Centre on Housing Rights and Evictions (Cohre), Nairobi, Kenya.Google Scholar
- Gachuru, M. W. (2005). Analyzing the impact of financial de-regulation on the risk of mortgage delinquency. A case study of the Kenyan mortgage market, Unpublished Ph. D. Thesis, Virginia Commonwealth University, Richmond, Virginia.Google Scholar
- Hair, J. E., Anderson, R. E., Tatham, R. L., & Black, W. C. (1998). Multivariate data analysis (5th ed.). New Jersey: Prentice Hall.Google Scholar
- HassConsult Limited (2013). Second quarter property index report, Nairobi, Kenya.Google Scholar
- Housing Finance Limited. (2012). Housing finance: Information memorandum supplement. Nairobi: Housing Finance Limited.Google Scholar
- Idrus, N., & Ho, C. S. (2008). Affordable and quality housing through the low cost housing provision in Malaysia. In Seminar of sustainable development and governance. Toyohashi University of Technology, 26 June 2008. http://eprints.utm.my/6624/1/NoraliahIdrus_HCSiong2008_AffordableAndQualityHousingThrough.pdf.
- Johnston, (2008). Housing affordability literature review and affordable housing program audit, Urban Research Centre, University of Western Sydney, Australia.Google Scholar
- Kiriko, A. (2013). A critical analysis of urban housing deficits: A case study of Nairobi County, Kenya, Unpublished research project submitted to the Institution of Surveyors of Kenya, Nairobi, Kenya.Google Scholar
- Murphy, L. T. (1989). Determining appropriate equation in multiple regression analysis. The Appraisal Journal, 1, 498–517.Google Scholar
- Nabutola, W. (2004). Affordable housing- some experiences from Kenya. In Paper presented at FIG Conference, Athens, Greece, May 22–27.Google Scholar
- Nelson, C. (2002).The link between growth management and housing affordability: The Academic Evidence-A discussion paper prepared for the Brookings Institution Centre on Urban and Metropolitan Policy.Google Scholar
- O’Flynn, L. (2011). Housing affordability, NSW Parliamentary Research Service. Briefing Paper No.04/2011, NSW Parliamentary Library, NSW. Available at http://www.parliament.nsw.gov.au/prod/parliament/publications.nsf/v3list RP subject, Accessed on August 8, 2014.
- Okechukwu, J. (2009). Urban housing affordability and housing policy dilemmas in Nigeria. Unpublished Ph.D. Thesis, School of Public Policy, The University of Birmingham, United Kingdom.Google Scholar
- Republic of Kenya. (2009). Population and housing census report. Nairobi: Government printer.Google Scholar
- Republic of Kenya. (2014). Kenya economic survey. Nairobi: Government printer.Google Scholar
- Republic of Kenya. (2016). The Banking (Amendment) Act, 2016. Nairobi: Government printer.Google Scholar
- Warah, R. (2001). “Slum upgrading”: Lessons learned in Nairobi, Kenya: A Summary of a consultative report on the conditions of informal settlements and slum upgrading initiatives in Nairobi, Kenya titled- Nairobi Situation Analysis by Paul Syagga, Winnie Mitulla and Sarah Karirah, Habitat Debate Vol no. 3, UNCHS, Nairobi, Kenya.Google Scholar
- Yates, J., Milligan, V., Berry, M., Burke, T. Gabriel, M., Phibbs, P., Pinnegar, S., & Randolph, B. (2007). Housing affordability: A 21st centuary problem, National Research Venture 3: Housing affordability for lower income Australians, AHURI, Australia.Google Scholar