5 Financial Habits of Kenyans Who Own a Home Before Age 35

For most Kenyans in the generation popularly known as Gen Y (born from 1981 to 1996) or millennials, owning a home is a major life goal that gives many sleepless nights. 

The rising cost of land has raised genuine fears over what the future portends. Will I afford a home for myself and my children? Will I afford to have a home anywhere near a metropolis where prices are ever skyrocketing? How will I build when I am always working? 

These are common fears among a generation whose parents mainly belong to the baby boomers and Gen X, who were at their prime when owning a home was much more manageable - due to high employment rates and low cost of living, including land. 

His article references multiple interviews with young adults who managed to build their own homes before exiting the youth age bracket (35). 

Start Small, Start Early

The experience among most youth homeowners is that a boom is seldom compared to the good old baby steps. From their first jobs or from their first businesses, first homeowners are intentional with their goal and save up something towards it.

As the old adage goes, little strokes fell great oaks - that is little strength when consistently applied can accomplish great things. Or kidogo kidogo hujaza kibaba if you like. 

The real estate market has been hit by inflation. An acre of land in some parts of Kenya - case in point Upper Hill, Nyali and Westlands - is now going for over Ksh350 million. 

You might be tempted to think that perhaps the dream of making a real estate purchase is reserved for a particular category of people. But the common advice among those who have done it is - to stay on course. 

Consider this; you are in the early stages of your career. Let’s say you just turned 25. Expenses are relatively low, but so is the salary. Assuming you can afford to spare Ksh20,000 every month, you would have Ksh480,000 by the time you are 27. And you would still have another eight years to exit the youth bracket. 

Read Also: The Best Way to Afford Making Big Purchases in Your 20s 

Invest, Invest and Keep Investing

The financial reality is that a shilling today does not have the same value it had two months ago - leave alone a few years back. It is advisable that once you have saved your money, let it realise its value through investment.

Consider the example given in the first tip above. If you were to hold the money you saved every month (Ksh20,000), you would have accumulated Ksh2.4 million by the time you were 35. Given the inflation rate, it is doubtful that you would afford a decent home with Ksh2.4 million in 2032. 

Financial experts note that holding your money actually means losing money - through inflation. Thus, keep investing as soon as you start saving, as recommended in step one. 

Read Also: Rising Inflation: Where Should You Keep, Invest Your Money?

You can consider a savings account where you lock your money for a guaranteed interest rate.

Money254 offers you a tool where you can compare the interest rates and types of savings accounts offered by Kenyan banks here.

The investment options are limitless. There are Treasury bonds and Treasury bills, unit trusts, real estate, Sacco shares and deposits, among others. 

Each investment option will have different interest rates, and the exit terms will vary. It is recommended that you explore all your options - including the perks of having more than one form of investment for diversification purposes. 

For example, if you were to invest Ksh480,000 in a 10-year bond with a coupon rate of 10%, it would earn you Ksh24,000 every six months for ten years.

This would mean a total interest of Ksh480,000. After the ten years, you would also get back your principal amount (Ksh480,000). The interest, however, is subject to a 15 percent withholding tax. 

Read Also: Where Do I Keep my savings? The 7 Main Places to Put Your Savings

Keep an Open Mind With Real Estate Investments

Some amenities that may have attracted you to a particular neighbourhood a few years ago may no longer exist there. In the same way, some of the factors that may make a specific area undesirable - may not be there in the next few years. 

Consider the case of Ruaka, a popular residential neighbourhood along Limuru Road, Kiambu County. According to market survey reports by different real estate firms, the cost of an acre of land in Ruaka averaged Ksh4 million in 2009. The area was hard hit by perceptions of insecurity. It was known as a notorious hub for Mungiki youth between 2006 and 2008. 

In the 12 years that have followed, the insecurity has been addressed. Major infrastructure projects, including the Northern Bypass and Redhill Link Road, have opened up the area.

A report released by real-estate firm Hass Consult reported that an acre of land in Ruaka was averaging Ksh92 million - as of May 2022. 

Thus, it is recommended that you keep an open mind and make adjustments based on your financial situation,market changes, and preferences. 

Read Also: Windfall: Areas in Nairobi, Environs Where Land Has Highest Returns

Don’t Be Shy to Take Loans

Debt is often characterised in a negative context, especially in African culture. However, in the modern financial world, experts agree that sustainable debt is a positive step on the road to financial freedom. 

Indeed, many youthful homeowners admit that they probably would not have gotten there without the right loans. 

The case for good debt is best made by referring to the universal truth - that today’s shilling will not have the same value a few months from today. 

Read Also: Why Debt is Good For You

On the road to owning your first home, experts advise that you make deliberate efforts to build a positive credit portfolio. This can be done by taking “good debt” and servicing it as per the agreed terms. 

Some homeowners also build credit portfolios by investing capital in Saccos - which in return, extend credit as a multiplication of your deposits. Others bank with institutions that offer mortgage financing or provide long-term loans. You can compare the various loan interest rates for personal loans in Kenya here.

The bottom line is that you may often need a lending hand in the journey to owning your first home - and there is no harm in keeping your options open. 

Read Also: Good Debt Vs Bad Debt: How to Tell the Difference

Research, Be Updated

The real estate business is a lot about market intelligence. The market is big, and it is important you remain updated with the trends. 

Consult real estate consultants on why certain areas have high land prices while others remain stagnant for years. What are the rent-to-own properties that fit within your budget? 

How does the government’s affordable housing plan work, and do I qualify? These are essential questions that will probably put you steps ahead as you work towards being a youthful homeowner. 

Wrapping up

Owning your first home while still in your youth is a big step towards financial freedom. It allows you space to focus on other investments as you settle into midlife and prepare for retirement. 

Despite the high cost of land and its ripple effect on increased costs of house ownership, there are plenty of opportunities for the youth to pursue the dreams of home ownership.

But, there is also a school of thought that views home-ownership as a liability. Curious about this viewpoint? Learn about it all here>> To Rent or to Own? 4 Things to Consider in the Kenyan Market