Middle class demand for home ownership largely goes unmet in Kenya and other countries in sub-Saharan Africa. Affordable housing is limited, and so are mortgages. But while the mortgage business is relatively new on the continent, officials say the mortgage market is starting to grow.
A World Bank survey released in February shows there are only about 14,000 home loans in Kenya, a nation of almost 39 million people.
And far fewer people own their own homes in neighboring Tanzania and Uganda.
Claudio Acioly with UN-Habitat says that nearly 70 percent of Africans are excluded from the formal housing finance market.
"If you compare to European standards, for example, where the house price to income ratio is about four or five, which means households would have to save the equivalent of five annual incomes to buy the good standard house. You see in Africa, in Kenya, this number going to 12 to 15 and even more," Acioly said.
Jacob Ogolla is technical manager at the National Housing Corporation, a government agency that focuses on affordable housing. He says that the price of land alone can comprise up to one-third of the total construction costs, especially within cities. "We have lost a number of investments actually from people that are coming from outside. Some of them have gone to Uganda, some of them have gone to Rwanda, others have gone to Tanzania even though the markets are not very developed as [much as] in Kenya," Ogolla said.
Ogolla says bank policies are also a problem, with the average mortgage rate at 15 percent, and home buyers required to pay a deposit of about 20 percent.
David Maveke is head of mortgage sales at the Housing Finance Corporation, the only institution in Kenya that exclusively offers mortgages.
He says his customers pay a 5 to 10 percent deposit, but can use pension savings to secure a loan. "We have a product, we have an opportunity that for those who are employed and they are members of registered pension schemes, they can be able to walk into their houses without having to pay a single cent, and we pay everything for them," he said.
Maveke says people taking out mortgages at Housing Finance need to earn about $1,250 (100,000 shillings) a month. But very few Kenyans earn that much money and the World Bank says only eight percent of Kenyans can afford a formal mortgage under current conditions.
So many middle class Kenyans turn to informal financing to buy or rent homes. One result is that urban areas built for the poor 20 years ago are now occupied by the middle class.
The poor, in turn, are pushed into Kenya's informal settlements. In Nairobi, the highest population increase is in these areas.