I’ve been wondering if I’ll ever be able to afford a house! I say this as a recent university graduate with no plans to buy a home in the immediate future. But, someday, I’d like to.
I’m a Generation Z, the group born between 1996 and 2012, also known as Zoomers or the influencer generation. Some of us entered adulthood in lockstep with the COVID-19 pandemic and the affordability crisis in the housing market.
The current generation of youth is likely to live with their parents for significantly longer after completing formal education due to a shortage of jobs that are crashing their ambitions for financial independence.
Statistics show that nearly 50 per cent of Kenyans between the ages of 18 and 25 still live at home or with extended family.
While 61 % of Kenyans own their homes, only 3% of rural areas: of those homeowners bought houses. In comparison, 93 % of homeowners built their own houses, and 3% inherited them, according to the Kenya National Bureau of Statistics.
Our generation will face the most significant gap between average income and average home prices in the coming years. Home prices in Nairobi, for instance, have increased fastest in 11 years due to renewed demand from buyers.
Data by realtor HassConsult show the price of an average house within the city rose 10.5 per cent in the year to June compared to a drop of 1.7 per cent in the same period a year earlier.
However, that statistic doesn’t mean homeownership is only a dream for us.
I get to talk to housing market experts to seek their advice for hopeful homeowners. So here’s what I’m doing to get ready,
1. Block out the noise
Gen Zers and millennials note that the housing market differs from what it was for our parents and that mortgage rates are no longer at the low percentages of recent years.
According to the Central Bank of Kenya (CBK), the average mortgage lending rate rose to 11.3 per cent in 2021 compared to 10.9 per cent the year before.
Similarly, Cytonn Real Estate observes that home ownership in Kenya remains low compared to other African countries, at 21.3% in urban areas as of 2020, compared to other African countries such as South Africa and Ghana, with 53.0% and 47.2% urban homeownership rates, respectively.
In addition, only 2% of the formally constructed houses target lower, according to the Habitat for Humanity report 2022. Further, the unemployment rate is 9.31%, and the below-poverty line stands at 36.8%.
But homeownership can still be in the picture with careful planning and due diligence.
2. Make a budget
The financial targets you set for your goals could be more extensive and dent your monthly budget. It would be best if you had tools such as a budget to help with daily spending.
This is to make sure you’re staying within your means. Consider starting a sinking fund where you save a little bit each month toward a future down payment.
3. Look into affordable housing programs in your area
Even if you’re right out of college, take a look at affordable housing programs.
4. Consider townhomes or condos.
Condos and townhomes are gaining popularity among millennials as starter homes because of their affordability and flexibility. Your first home may not be your dream home, and that’s OK.
Congested apartments and childhood bedrooms are just some of the options for Gen Zers. Start taking the little steps now to help you prepare for the housing market down the road.
