INFLUENCE OF REAL ESTATE BACKED LIFE INSURANCE PRODUCT ON AFFORDABLE HOUSING IN KENYA

Abstract

Kenyaâs housing challenge is extreme. The average price for an apartment in the capital city of Nairobi is currently KES 11.58M (USD 136,000), up from KES 5.2M (USD 61,000) in December 2000.5 There is no home on the formal market below KES 2M (USD 23,000), a level that is still completely unaffordable to low income populations. The Kenyan Government established the Affordable Housing Initiative, as one of its Big Four pillars to promote long-term economic development, focused on delivering 500,000 housing units for the lower and middle-income population segments by 2022. Despite the significance potential of real estate backed life insurance product âhome ownership planâ, in facilitating housing affordability by majority low- and middle-income earners, there lacks a specific study that has managed to evaluate the significant impact of real estate backed life insurance product on affordable housing in Kenya. This paper main objective was hence to evaluate the influence of real estate backed life insurance product on affordable housing in Kenya with emphasis on home ownership savings plan. The study specific objectives included: To estimate market potential for potential home buyers; To identify typology preferences for potential home buyers; To identify potential market for Home Ownership Savings Plan and to estimate homes which can be afforded by majority of potential home buyers. The study adopted a survey research design and the target population comprised of various households within Nairobi and its surroundings. The study adopted a survey research design and the target population comprised of various households within Nairobi and its surroundings. A market survey was conducted in order to establish the requirements of the affordable housing market. The study findings indicated that the estimated market potential of affordable housing is 80% households; majority 52% of the respondents preferred three bedroomed houses; the potential market for home ownership saving plan scheme plan is over 80% ; estimate of  houses  that can be afforded is Ksh 3.25M. The study concluded that home Saving Plan Scheme is potential real estate insurance product that can help many households to purchase affordable houses in Kenya. The study recommendation is that potential house buyers should be encouraged to utilise the benefits of existing Home Ownership Savings Plans (HOSP).