Article by FRANCIS AYIEKO Source: Daily Nation, Posted Thursday, November 22 2012 at 20:00
Beaming with pride, the woman appeared to be in dreamland as she showed visitors her new two-bedroom house.
Although the house lacks the trappings of up-market apartments such as a bathtub, sauna, in-built wardrobes, stylish floors and wall finishing, elegantly done granite-surface kitchen or top gas cookers, it was decent enough to be any renter’s envy.
Until last week, the middle-aged woman lived in a shanty in Kawangware estate, where she had stayed with her late husband (she said he died recently because of stress) since the 2007/2008 post-election violence that uprooted them from their former home.
She has been selling porridge to make ends meet. For the past four years, she has been saving part of the proceeds from her business through a chama affiliated to the NationalCooperative Housing Union (Nachu).
Her savings helped her to get a loan from Nachu that was enough to construct the Sh1.2 million house she now owns in Kiambu County, just a few kilometres from Nairobi’s central business district.
Dozens of other women in her chama also benefited from the loan and are now proud owners of houses like hers under the same project.
This woman could not hide her joy last week as she showed journalists and guests who had come for the official handing over of the houses by Nachu to the owners.
The common thread among the beneficiaries of the new houses was that they were all small-scale traders.
Lesson one: Owning a house starts with saving diligently.
Lesson two: No amount of income is too small to lead to home ownership. What is important is the will and determination to work towards realising your dream house.
Of course many may argue that it is almost impossible to save for a house in Kenya because of rapidly rising prices.
True, housing prices are rising rapidly, but if you want it bad enough, you will save and look for creative ways to achieve your dream. The case of the Mama Uji mentioned above is proof enough.
The thing is, you do not necessarily have to go through the formal mortgage market to own a home.
In fact, in its latest survey report, The Mortgage Company (TMC) says that the formal mortgage market is facing stiff competition from the alternative market, thanks to the high-interest-rates regime that dogged the country’s financial sector for almost one year until three months ago.
The mortgage brokerage firm said that more and more Kenyans are turning to saccos and microfinance institutions to finance housing development.
“The profound shift in mortgage rates of last year has led to the acceleration in the development of the alternative mortgage market, expanding the funds coming into mortgage finance and the options available to Kenyans,” said TMC managing director Caroline Kariuki.
Notable, she said, was the way the diaspora is becoming organised setting up saccos, a trend that could see them become significant players in the mortgage and property sectors.
“This kind of engagement additionally opens up a good vetting avenue to provide the lenders with credible partners. Altogether, this is a trend worth watching closely,” said Ms Kariuki.
I have heard HousingFinance managing director Frank Ireri say that competition is becoming stiff in the country’s mortgage market because of the entrance of commercial banks, saccos, and insurance firms, forcing stand-alone mortgage firms to “be creative” to stay afloat.
The truth of the matter is that borrowing for the full value of a complete house, as required under mortgage, does not suit most aspiring home owners. I do not think it is an exaggeration to say that over 90 per cent of Kenyan home owners did not take the mortgage route.
The most common route is staged development or what is popularly referred to as incremental approach to building, where beneficiaries stage out the development of the house and borrow for those stages based on their capacity.
With this approach, nobody is left out of home ownership bandwagon.
Do you desire to own a house…what are you doing about it? Our next post, 100 million cheque?