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?
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