A steep rise in land prices in Nairobi and other Kenyan towns has locked out millions of prospective buyers, quashing their dreams of owning a home. Statistics show that land prices have more than quadrupled in the last seven years.
The extent of price escalation is clear in Rongai, a busy suburb on the South West of Nairobi, where an acre of land is now priced at more than Sh14 million up from Sh765,000 six years ago — locking out many ambitious Kenyans from the homes market.
Mr Ben Ongeri, 47, a public servant who bought land in Rongai and built a house seven years ago counts himself lucky to have bought the parcel at the right time.
“I pity young men and women who are entering the labour market today wondering whether they will ever be able to own property in Nairobi at this rate of price escalation,” he said.
Mr Ongeri bought the quarter acre piece of land in 2006 at Sh580,000.
“I bought the plot using a loan and took time to build a three-bedroom house where I now live,” said Mr Ongeri.
An eighth of an-acre piece of land in Ongeri’s neighbourhood now costs a Sh3.3 million placing it above the reach of many working Kenyans.
(READ: Land prices dim home ownership prospects)
Things are no different in Kitengela, to the South of Nairobi, once a favourite of buyers. A ready-for-occupation house is even more costly with prices having shot above the Sh10 million mark for a standard three bedroomed family house.
A survey of various magazines and websites dealing in property shows that three bedroom houses on the outskirts of Nairobi cost about Sh11 million.
The cost of apartments, which were until 2005 priced below Sh5 million, has more than doubled. One developer is selling a two-bedroom apartment in a middle-income area of Nairobi at Sh7.3 million.
(READ: Apartments in high demand as land prices shoot up)
“I had thought of buying an apartment worth about Sh5 million through mortgage but I gave up,” said Vincent Mulei, who earns Sh127,000 a month.
Mr Mulei said that he had abandoned the thought of buying a house in Nairobi and was focusing his energy on building a home upcountry.
Antony Kuyo, a real estate consultant, described the trend as worrying.
“We are seeing property prices rise at a faster rate than one would expect. This has become a hindrance to home ownership, leaving the sector in the hands of a few,” he said.
Mr Kuyo blames weak regulation which has left Kenya’s property market in the hands of speculators eager to make huge profits at the expense of clients.