Peter Kibugi, founder and Managing Director of Crystal Pearl Real Estate/HANDOUT
Rising property prices often signal a healthy real estate market. In Kenya, however, they also conceal a deeper structural problem. While investors celebrate capital gains, millions of Kenyans continue to struggle to access decent, affordable housing, highlighting a mismatch between market performance and housing needs.
Behind the rising values lies a housing deficit of more than two million units, a gap that continues to widen by an estimated 200,000 homes every year. The challenge facing the country is therefore not simply about rising property values, but about whether enough decent and affordable homes can be delivered to meet growing demand.
Rapid urbanisation continues to place enormous pressure on housing. Kenya's urban population is expanding at an annual rate of about 4.4 per cent, while nearly 60 per cent of Nairobi residents still live in informal settlements occupying just six per cent of the city's land.
Home ownership in urban areas remains low at only 21.3 per cent, meaning almost four out of every five city residents continue to rely on rental housing, often with little prospect of owning a home. This challenge has developed over many years.
Decades of underinvestment, lengthy approval processes and a mortgage market that remains beyond the reach of most households have combined to create one of the country's biggest development gaps.
Only about four per cent of Kenyans can afford a mortgage above Sh10 million, while the country has just around 30,000 active mortgages despite a population exceeding 50 million. Expanding access to housing finance therefore remains as important as increasing the supply of new homes.
The government's Affordable Housing Programme represents the most ambitious attempt in a generation to narrow this deficit. By mid-2025, more than 45,000 housing units were under construction across 37 counties through public-private partnerships, Kenya Mortgage Refinance Company-backed lending and the Affordable Housing Levy.
The flagship Mukuru Affordable Housing project in Nairobi's Embakasi South is expected to deliver more than 13,000 homes alongside schools, daycare centres, green spaces and supporting social infrastructure. Financing mechanisms are also becoming more inclusive. KMRC has financed thousands of affordable mortgages, while the Kenya Mortgage Guarantee Trust has been established to encourage lending to informal sector and gig economy workers.
A World Bank-backed credit guarantee scheme is further extending mortgage access to non-salaried earners who have traditionally struggled to secure financing from commercial banks. Even so, major obstacles remain. Delays in development approvals continue to increase project costs and slow delivery, while demand continues to outpace supply.
Bridging Kenya's housing gap will require faster planning approvals, greater private sector participation and sustained investment in housing finance. The wider economy offers reasons for cautious optimism. Lower Central Bank interest rates have reduced borrowing costs, the shilling has stabilised after years of volatility and Kenya's economy is projected to maintain steady growth.
These factors are strengthening confidence among both local and diaspora investors. Kenya's housing market is entering a new phase where policy, finance and infrastructure will determine success more than headline price growth.
The country's urban population will continue to expand, infrastructure will continue to improve and demand for quality housing will only become stronger.
The real question is not whether homes will be needed, but whether government and the private sector can work together quickly enough to deliver affordable housing where Kenyans increasingly want to live.
The writer is the founder and Managing Director of Crystal Pearl Real Estate
