Cost of building materials impeding housing plan

By Dan Awendo Undoubtedly, the biggest space to play for any estate developer in the future is affordable housing — development of units selling at between Sh2 million to Sh4 million. For us to achieve this, affordable building materials and harnessing of new building technologies that lower construction cost will be the Holy Grail that will unlock the prospects of the property market. In Kenya, 60 per cent of households are considered to be living in inadequate housing; 250,000 units are required annually but only 50,000 units are constructed. However, pricing remains a big deterrent for potential home owners. As developers sink into debt and banks auction property built on loans, some housing units remain ghost towns as they are priced out of reach. Even as government projects to have at least 500,000 affordable homes by 2022, the challenge remains finding practical solutions to deliver faster and cost effective houses. The government has made a commendable strides by developing a comprehensive housing package that will incentivise the private sector in the construction of low cost housing; which would include reduction of corporate tax rates from 30 to 15 per cent for developers who construct multiple low-cost units. Though the government’s move is laudable, it does not address the issue of cost of building materials which will be key to the delivery of the low-cost mass housing. It is noteworthy that building materials constitute the main input in construction, sometimes accounting for as much as 75 per cent of the cost. In addition, most construction companies and individuals still import significant amounts of building materials and components thus contributing to high building costs. The Kenya National Bureau of Statistics in its 2018 Economic Survey report indicated that the cost of materials increased by 3 per cent in 2017 compared to a 1.8 per cent in 2016. Further, the highest rise in the cost of building materials was noted in the residential buildings having increased by 3.8 per cent. Notably, sand prices recently shot up due to strict regulations set in various counties. This only makes it hard for contractors who are already grappling with high costs for timber, iron and steel bars, rods, labour among others. By addressing the pricing issue, we will not only surpass the deficit of 200,000 housing units per year, but also encourage contractors to stop using substandard materials in attempt to cut costs. In addition, the government should encourage the use of Alternative Building Technologies (ABTs) which have proven they can improve the speed of construction, eventually reducing the overall cost of construction. ABTs range from prefabricated panels, dry construction, indigenous materials, green or recycled materials and composite structural materials. Kenyans have been slow in adopting ABTs and have a bias towards traditional materials and techniques, specifically stone and cement. Many still doubt the durability of the new technologies. One of the impediments to adoption of ABTs are professionals and consultants who have little or no knowledge of these technologies and influence potential house builders and buyers against technology-based construction. It is imperative to also look into land affordability. Land is still the single most expensive component of housing, accounting for 15 to 40 per cent of total development cost. — The writer is the Managing Director of Home Afrika

Cost of building materials impeding housing plan

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Cost of building materials impeding housing plan

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