Architects have expressed apprehensions regarding the surging costs of land and construction materials, posing potential challenges to the implementation of President William Ruto's Affordable Housing Programme.
The Architectural Association of Kenya (AAK), in its annual Status of Build Environment Report, raised concerns about the escalating costs that could undermine the affordability of the housing units.
The report disclosed a significant spike in land prices in Nairobi, highlighting the transformation from a Ksh30 million cost in 2007 to a staggering Ksh190 million in high-demand locations. This substantial increase in land prices may compel the government to transfer the additional expenses to potential buyers.
Kingsley Muwowo, Chief Finance Officer at Shelter Afrique, emphasized the recommended proportion of land costs in the total housing unit cost, ideally constituting 10 to 15 percent. However, the current scenario depicts land costs representing a disproportionate 40 to 60 percent of the total housing unit cost, as stated in the report.
Concurrently, the imposition of recent government taxes and the weakened Shilling have contributed to elevated construction material expenses. Experts cited the 16 percent VAT on fuel products as a prime example, leading to increased transportation costs.
The additional financial burden on investors may necessitate raising house prices to maintain profit margins, potentially discouraging other investors from venturing into housing projects due to the escalated cost of doing business.
Addressing these challenges, the architects emphasized the critical importance of successfully managing the high costs associated with land and construction materials for the Affordable Housing Project's success. They called for collaborative efforts involving the government, private sector, development partners, wholesale lenders, and investors to enhance housing finance availability and establish a sustainable housing finance system.
Moreover, the architects recommended that the government explore innovative solutions, such as adopting alternative building materials that are more cost-effective, to mitigate the impact of rising expenses on the housing initiative.