Cost Of Construction Drops Immensely Despite Increase In Price Of Land

NAKURU, Kenya, Dec 10 –  Data from the Department of Housing and Urban Development has revealed that the cost of construction in the country within the last four years has dropped by nearly 300 percent.

This is amidst the increase in prices of land. Concerns had been raised by stakeholders that this would scare prospective homeowners from investing.

According to Housing and Urban Development Principal Secretary Charles Hinga the cost of constructing a one-meter square currently stood at Sh25,000 down from Sh88,000 in 2017.

“The cost of construction has dropped by over 300 percent while the cost of houses has dropped from Sh11m to around Sh5m per unit,” said Hinga.

This has resulted in a wave of construction of homes in urban centres.

Also, an oversupply of construction materials has resulted in the slashing of prices of the houses in Nairobi.

The housing sector in the country contributes 11.9 to the GDP from 7.5 percent in 2019 making it one of the fastest-growing sectors.

Stakeholders have meanwhile expressed concern that Kenyans are still hesitant of receiving mortgages despite the interest rates remaining below 10 percent in the last four years.

“Despite the government creating a conducive environment for the mortgage market, there is poor intake among Kenyans with the country recording 25,000 cases every year,” he said.

Hinga who was speaking at the conference for stakeholders in the mortgage sector in Naivasha also hailed the ongoing government housing project describing it as a game-changer.

“For years, figures have indicated that the country has a shortage of 200,000 housing units every year but this has changed with more affordable houses coming up every day,” he said.

Kenya Mortgage Refinance Company (KMRC) CEO Johnstone Olteita identified rising prices of land as one of the major challenges facing the mortgage sector.

“Despite the challenges we have seen interest rates on mortgage drop from 14 to nine percent and we are working with Saccos to also offer the mortgage service,” said Olteita.