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Home ownership dream takes a hit after construction costs up by 16pc
AAK warns that the rising cost of materials, labour, and transport is not only inflating project budgets but also widening the gap between households and affordable home ownership.
The cost of constructing houses has shot up by up to 16 percent in just 10 months, dealing a major blow to the homeownership dream of many Kenyans who are also keeping away by high mortgage terms.
A fresh update by the Architectural Association of Kenya (AAK) shows that the price of putting up homes, including bungalows, maisonettes, and luxury apartments, has climbed sharply in the 10 months to October.
The unit cost of a bungalow and maisonette grew by about 12 percent, driven by high fuel costs and inflation, piling fresh pressure on Kenya’s housing market. Putting up a bungalow now costs Sh54,730 per square metre while the cost for a maisonette is Sh59,868 per square metre.
“The cost of constructing a standard bungalow increased from Sh48,750 per square meter in 2024, representing a 12.27 percent rise. Middle-class maisonettes recorded a more moderate increase of 11.28 percent, moving from Sh53,800 to Sh59,868 per square meter,” said AAK.
Construction costs across all major residential building categories continued to rise between 2024 and 2025, the association has said, at a time when only a tiny fraction of households can qualify for costly mortgages.
“Higher-end units registered sharper escalations, with luxurious maisonettes rising by 16.35 percent from Sh84,000 to Sh97,730 per square meter,” said AAK.
“Standard low-rise apartments experienced a 13.9 percent increase, from Sh60,435 to Sh68,837 per square meter, while luxurious apartment blocks saw their construction costs climb by 15.53 percent, from Sh77,910 to Sh90,013 per square meter,” the lobby added.
The higher cost reflects pressure on prices of construction material such as sand for a better part of 2025.
For example, data by the Kenya National Bureau of Statistics (KNBS) shows that the cost of construction input rose at the fastest pace in nearly two years during the third quarter of 2025, lifted by higher prices of steel, electrical fittings, sand, and bitumen, signaling budget pressure on construction projects.
The Construction Input Price Index (CIPI) increased by 1.27 percent between July and September this year, marking the quickest quarterly rise since December 2023.
The index stood at 121.27 points, up from 119.75 in the previous quarter and 120.38 in the same period last year.
The CIPI measures the price changes in the inputs used in construction, such as materials, labour, and equipment. The index helps to track overall construction costs.
The increase in CIPI, between July and September, was driven mainly by steel and reinforced bars, whose prices rose by 5.2 percent, while electrical fittings increased by 5.1 percent.
Prices of bitumen macadam and sand rose by 4.7 percent and 3.6 percent, respectively.
The cost of cement and timber, however, eased by 1.39 percent and 2.71 percent, respectively, helping to marginally moderate the overall rise in input costs.
KNBS data also showed that the Building Cost Index, which measures changes in material prices for structural works, rose by 1.48 percent to 121.29 points, while the Civil Engineering Cost Index climbed to 121.79, reflecting higher prices of bitumen and petroleum products.
This marked the sharpest quarterly movement in 21 months, reversing a period of relative price stability that had held since early 2024.
The last comparable increase was in December 2023, when construction input prices rose by 1.66 percent. AAK warns that the rising cost of materials, labour, and transport is not only inflating project budgets but also widening the gap between households and affordable home ownership.
With developers passing increased costs onto buyers, market prices for newly built homes continue to climb at a pace outstripping wage growth and household savings.
This trend is locking many first-time buyers out of the market and deepening reliance on rental housing, especially in urban centres where demand remains high.
"These increases reflect higher material costs, labor adjustments, and the general inflationary environment within Kenya’s construction sector. The trend demonstrates that residential development costs continue to rise, even with relative stability in the exchange rate,” added AAK.
