Only 4 per cent of Kenyans can afford Sh10 million homes - survey
Banks say the mismatch between average income and the cost of property is a key factor limiting mortgage growth.
A new study has revealed that the vast majority of Kenyans cannot afford expensive mortgages, with only a small share of the population qualifying for loans above Sh10 million.
Research by Zamara, the Centre for Affordable Housing Finance in Africa, and Financial Sector Deepening Kenya indicates that just 6,146 out of 145,205 pension scheme members, or about 4 per cent, have the income needed for such home loans.
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This aligns with data from the Central Bank of Kenya (CBK), which shows that the typical mortgage has risen to Sh9 million, up from Sh6.9 million in 2013 and Sh7.5 million in 2014.
The increase is largely driven by rising property prices and high upfront fees, making it harder for most Kenyans to enter the formal housing market.
The survey highlights that stagnant wages, coupled with costly loans, leave many households reliant on short-term or informal borrowing, which is unsuitable for long-term home ownership.
CBK figures indicate that a Sh9 million mortgage with an 11-year repayment plan at 14.9 per cent interest requires monthly payments of at least Sh140,000.
To qualify, a borrower would need a monthly income of more than Sh420,000, but over 85 per cent of Kenyans earn below Sh100,000.
“High interest rates, strict eligibility criteria, and low income levels push most households to rely on short-term, high-interest personal loans or informal financing, which are not ideal for long-term housing projects,” the report notes.
Banks say the mismatch between average income and the cost of property is a key factor limiting mortgage growth.
Although 3.4 million Kenyans are formally employed, the banking sector has only issued 30,016 mortgages.
The survey also shows that nearly a quarter of respondents could afford a Sh3 million house with a 25-year repayment term at 9.5 per cent interest.
“Under the subsidised Kenya Mortgage Refinance Company rate of 9.5 per cent, a household earning Sh100,000 per month can qualify for a mortgage of Sh3.4 million, enough to purchase a typical Affordable Housing Programme unit,” the study adds.
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