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The Housing Bubble in Kenya will Burst very soon....
Rank: Member Joined: 8/18/2009 Posts: 303
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http://www.standardmedia...to+boost+home+ownership
Code:The Central Bank report. Here are a few selected excerpts from the above report:
* only eight per cent of Kenyans — 320, 000 households — can afford a mortgage was shocking
* for one to buy a house worth Sh2 million, for example, one must have a net salary of Sh100,000, and service the loan at Sh42,000 a month for a period of 15 years at an interest rate of 14.5 per cent. Those earning less have no place in the mortgage industry and must find another way of owning their dream house
* The shocking revelations also indicate that the total mortgage loan book in the country is only 16,000 accounts, while the total value of mortgage loans, as at the end of December last year was Sh133.6 billion. This means that, technically, only 16,000 people/organisations in the whole of Kenya have taken up mortgages
* It is also an indication that buying property in Kenya is predominantly for the rich, who opt for cash sales as opposed to mortgages.
* Professionals in the housing sector say the findings reflect the high level of speculation on land that has pushed property prices through the roof
[b]Conclusion[/b]
Only 1 in 10 Kenyans can afford to buy the home that they live in, and even fewer Kenyan can afford to take up mortgages. In my mind, this report clearly indicates that the Kenyan real estate market is in the middle of a bubble. Real estate prices have gotten to be so high that the great majority of Kenyans just cannot afford real estate.
Sooner or later, this bubble will burst and prices will come crashing down. Many of the “me too” real estate developers and investors will lose vast sums of money. It is just a matter of time…... 
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Rank: New-farer Joined: 6/3/2010 Posts: 96
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Need to study this in detail...only 16,000 mortgage accounts...but at least the mortgage per account is a reasonable 8m per account which is at least not out of this world...
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Rank: Member Joined: 11/9/2007 Posts: 288 Location: OZ
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Pastor M wrote:http://www.standardmedia.co.ke/editorial/InsidePage.php?id=2000030176&cid=16&story=Fresh+ideas+needed+to+boost+home+ownership Code:The Central Bank report. Here are a few selected excerpts from the above report:
* only eight per cent of Kenyans — 320, 000 households — can afford a mortgage was shocking
* for one to buy a house worth Sh2 million, for example, one must have a net salary of Sh100,000, and service the loan at Sh42,000 a month for a period of 15 years at an interest rate of 14.5 per cent. Those earning less have no place in the mortgage industry and must find another way of owning their dream house
* The shocking revelations also indicate that the total mortgage loan book in the country is only 16,000 accounts, while the total value of mortgage loans, as at the end of December last year was Sh133.6 billion. This means that, technically, only 16,000 people/organisations in the whole of Kenya have taken up mortgages
* It is also an indication that buying property in Kenya is predominantly for the rich, who opt for cash sales as opposed to mortgages.
* Professionals in the housing sector say the findings reflect the high level of speculation on land that has pushed property prices through the roof
[b]Conclusion[/b]
Only 1 in 10 Kenyans can afford to buy the home that they live in, and even fewer Kenyan can afford to take up mortgages. In my mind, this report clearly indicates that the Kenyan real estate market is in the middle of a bubble. Real estate prices have gotten to be so high that the great majority of Kenyans just cannot afford real estate.
Sooner or later, this bubble will burst and prices will come crashing down. Many of the “me too” real estate developers and investors will lose vast sums of money. It is just a matter of time…... The bubble burst still far from coming close..crazy returns yep..but bubble burst not yet.. The problem with Kenya is that the gap between rich and poor is so great..hence home ownership is very low... More monies, more problems...
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Rank: New-farer Joined: 12/30/2010 Posts: 41 Location: Africa
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was present there when the report was availed.
Reporters!!!! What the standard guy does not mention is that Kenyas urban population will double in the coming years. The middle class will also grow as economies across Africa grow. The interest rates should also be reduced to manageable levels below 10%. in Sweden it is 4% for mortgage rates. The prices will also go as inflation picks up. Costs of land will obviously grow but to counter this Kenya should go the Rwanda way and tax unused land. Rental income will go down. My russian friend tells me Kenya is where most Easter Europeans countries were in Real Estate 20 years ago.
Developers will also narrow down to only a few competitors. Right now everyone wants a piece of the pie but not everyone will survive. Only a few developers will.
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Rank: Member Joined: 6/26/2008 Posts: 319
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There has been such a post here before, but at least now we have the figures...
I stand by my opinion back then - it's just a matter of time - the bubble WILL burst. Don't panick though - this may happen in another 20years when u have reaped handsomely from this overpricing anyway - but don't also invest without caution - it might burst next week, month.... All that's missing is a spark - KPLC, weka wire moto!
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Rank: Veteran Joined: 5/24/2010 Posts: 846 Location: KENYA
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Seles83 wrote:Pastor M wrote:http://www.standardmedia.co.ke/editorial/InsidePage.php?id=2000030176&cid=16&story=Fresh+ideas+needed+to+boost+home+ownership Code:The Central Bank report. Here are a few selected excerpts from the above report:
* only eight per cent of Kenyans — 320, 000 households — can afford a mortgage was shocking
* for one to buy a house worth Sh2 million, for example, one must have a net salary of Sh100,000, and service the loan at Sh42,000 a month for a period of 15 years at an interest rate of 14.5 per cent. Those earning less have no place in the mortgage industry and must find another way of owning their dream house
* The shocking revelations also indicate that the total mortgage loan book in the country is only 16,000 accounts, while the total value of mortgage loans, as at the end of December last year was Sh133.6 billion. This means that, technically, only 16,000 people/organisations in the whole of Kenya have taken up mortgages
* It is also an indication that buying property in Kenya is predominantly for the rich, who opt for cash sales as opposed to mortgages.
* Professionals in the housing sector say the findings reflect the high level of speculation on land that has pushed property prices through the roof
[b]Conclusion[/b]
Only 1 in 10 Kenyans can afford to buy the home that they live in, and even fewer Kenyan can afford to take up mortgages. In my mind, this report clearly indicates that the Kenyan real estate market is in the middle of a bubble. Real estate prices have gotten to be so high that the great majority of Kenyans just cannot afford real estate.
Sooner or later, this bubble will burst and prices will come crashing down. Many of the “me too” real estate developers and investors will lose vast sums of money. It is just a matter of time…... The bubble burst still far from coming close..crazy returns yep..but bubble burst not yet.. The problem with Kenya is that the gap between rich and poor is so great..hence home ownership is very low... Hmmmm, I don't know....  I can buy a house for $34,000 in Las Vegas but not in Nairobi, no? That's about Kes2.7 m. That cannot even come close to getting me a house in Karen, where I have to supply my own water. Strange economics. Real estate in kenya is a massive gamble. I think prices are just rising because people 'know' they should. But bubble, not sooo fast. 
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Rank: New-farer Joined: 3/1/2011 Posts: 4
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We are right in the path that was taken by the developed countries. Unfortunately it is like a pre-determined path that has to be followed. The bubble will burst, the question is when?
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Rank: New-farer Joined: 12/30/2010 Posts: 41 Location: Africa
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i disagee..the world population is 7 billion now..in the year 2050 it will be 9 billion Of these around 2 billion will be african. Prices in the equator will rise as environments in the north and south of the equator get unstable..Making it harder to grow food there, higher population will mean more food to feed, less land to cultivate and high prices for food etc. Africa is the only virgin continent in the world. It should eventually move into the asian and South American way..its going to take a while before Real Estate crushes but if at all it will it will rebound. Land will be a more expensive commodoity than oil in the future and Sub Saharan Africa will reap alot.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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James Mwangi was on telly jana saying how he is thinking of how to replicate the Equity model in Kenya's mortgage market. His vision is to see a person earning 20K accessing a mortgage. My 1st thought was SUBPRIME HERE WE COME. When this banker gets his way then we will be headed str8 to bubble world. My take on our current position is that they'll be price stagnation as more low cost houses are supplied. The counties will also distribute demand & capital more evenly.
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Rank: Member Joined: 11/17/2009 Posts: 399 Location: Where everyone knows you
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This is shocking and very sad.
Only 16,000 people have a mortgage. I cant believe it.
A guy with a NET salary of 100k pm. has to pay 42k pm. I can believe it for short term
loans - but for 15 years . Madness.
I see a lot of houses sold every day in posh areas like Lavington, Westlands, Karen etc. These are going for 50 million plus. Who is buying these ? They dont need a mortgage and pay cash.
Where do they get their money from ?Your guess is as good as mine. Maybe these are guys doing fx trading or online marketibg !!!!
These high class houses are not coming down soon.
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The Housing Bubble in Kenya will Burst very soon....
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