Discussion Paper No. 259 of 2021 on Financing Models for Affordable and Adequate Housing in Kenya

Abstract

The study investigates the symbiosis between housing financing and housing sector performance by using household and counties. It establishes that, at county level, uptake of housing loans are inelastic to changes in number of bank branches and mobile banking subscriptions, having registered positive elasticities of 0.2 and 0.3, respectively, but the age of household head is elastic with elasticity of 3.4 while negative elasticities of 0.5 were established for population living in poverty, average rent paid and per capita gross county product. At household level, uptake of housing loans increases with income, rent payable, mobile banking, age, female gender, education and employment status, but household size, marital status and area of residence were not significant. Adequate housing was associated with uptake of housing loans, together with increase in incomes, rent and age, and the female gender, post-primary education and the unmarried, but reduces with household size though subscription to mobile banking, status of employment and area of residence were not significant. The likelihood of having adequate room occupancy improves with loans uptake, rent payable, age of household head, female household heads, education level, employment and unmarried persons, and reduces with household size, but income and mobile banking subscriptions were not significant. In terms of affordability, rent payable increases with loans uptake, income level, household size, age, quality of walling, mobile banking subscription, female gender, education level, employment, urban residence and unmarried household heads. Kenya can mobilize additional Ksh 500 billion from the financial sector channels by utilizing policies allowing the banking, insurance, savings and credit organizations, pension and capital markets to finance or invest in real estate.