The National Housing Corporation (NHC) is shifting its focus to include smaller homes as the State-owned firm targets low-income earners with Sh2 million houses to be built from next year.
The corporation will build diverse property on Nairobiâ€™s Thika Road, Eldoret, Kisumu and Mombasa that will include one bedroom apartmentsâ€”a shift from the three to four bed-roomed units in high-end neighbourhoods.
The corporation is also looking for joint ventures with large land owners and concessionary loans from international financiers to increase smaller and cheaper units in a move that could boost home-ownership at the bottom-end of the market.
Peter Njuguna, the NHC managing director, said the corporation would target the low-end of the market that has been neglected by private developers.
â€œWe are targeting individuals in the lower and middle market segments who want to access decent housing at friendly prices,â€ said Mr Njuguna.
â€œA bachelor who is just starting in employment for instance does not require a three-bedroom house. Everybody will be taken care of according to their particular needs.â€
This is a market that NHC has not been able to serve due to the high pricing of houses that the corporation has been building in estates such as Kileleshwa, Nairobi West and Langâ€™ata, with homes costing up to Sh13 million for three bedroom units.
For instance, a two- bedroom house in Kileleshwa that is worth Sh8 million will cost a buyer Sh101,219 in monthly re-payments for 15 years based on NHC interest rate of 13 per cent.
This means that only individuals earning nearly Sh300, 000 a month can afford the property based on bankersâ€™ rule that workers should take home at least a third of their income.
NHC is seeking to break this barrier through the launch of low cost homes in Nairobi. The Sh2 million-one-bedroom house will attract a monthly charge of Sh25,304 over the 15 years, meaning that workers with a gross monthly income of about Sh60, 000 can qualify for the home.
Kenya has a housing shortfall of 150,000 units annually with the lower and middle sections of the market hardest-hit as investors keep away, citing low returns.
Developers also attribute the lack of supply in the bottom end of the market to shortage of land to put up large housing projects.
The NHC also Thursday starts the search for at least five acres of land within a radius of 20 kilometres from Nairobiâ€™s city centre to meet growing demand from working class Kenyans.
â€œNHC wishes to purchase at least five acres of prime land for housing development in a good location situated not more than 20 kilometres from Nairobiâ€™s Central Business District,â€ says the corporation in a press notice. But firm is not abandoning the high end market, which has faced a rally in rental income and seen a doubling in home prices over the past five years.
This has egged on high-net worth investors like insurance firms, investment firms like Centum and pension scheme to pour billions into real estate.
The NHC will next year build about 11,000 houses across the country, which will include two and three-bedroomed houses whose prices will be up to Sh7 million.
About 3,000 units will be built along Thika Road, Eldoret (1,200, 1,000 units in Kisumu), Changamwe in Mombasa (1,800) and 4,000 houses on Nairobiâ€™s Mombasa Road.
Mr Njuguna said land owners will be paid the full cost of the land and a cut on profits gained once the houses are completed and sold in a joint venture model.