New Data Shows Drop in Home Ownership Despite Govt’s Housing Projects

In Summary 

• Kenya saw a 5.2% rise in December 2024 diaspora remittance inflows, reaching Ksh57.5 billion, surpassing traditional exports and strengthening foreign reserves.
• Homeownership has declined in Kenya, attributed to high mortgage costs and shifting investment priorities.
• New vehicle sales dipped in 2024, with second-hand imports dominating amidst economic challenges, while Isuzu East Africa retained market leadership.
• Office spaces face a 34.4% vacancy rate as hybrid work models reshape demand, leaving malls and industrial properties with higher occupancy rates.
• Calls for tax policy reforms grow, with experts advocating for stability and predictability to support economic confidence and long-term planning.
• Kenya Power's stock rally boosted Kiharu MP Ndindi Nyoro’s stake to Ksh210 million, reflecting investor confidence in the company's turnaround success.

In today's news, The Star reports that Kenya recorded strong diaspora remittance inflows in December 2024, reaching $445.4 million (Ksh57.5 billion), a 5.2% increase from November’s $423.2 million (Ksh54.5 billion). The US contributed 51% of total annual remittances, which surpassed earnings from major exports like tea, coffee, and horticulture. These inflows bolstered Kenya’s foreign exchange reserves, which stood at $9.143 billion (Ksh1.184 trillion) as of January 16, 2025, equivalent to 4.7 months of import cover, meeting statutory requirements. Treasury bill yields continued to decline, with the 91-day bill averaging 9.56%, while a Treasury bond auction on January 15 saw an oversubscription of 196.7%, with bids totaling Ksh59 billion against an advertised Ksh30 billion. Kenya remains among Africa’s top three recipients of diaspora remittances, behind Nigeria and Ghana. 

In a report by the Business Daily, Kenya's homeownership rate has dropped from 64% in 2013 to 61% in 2024, as urban migration drives more households to rent. Urban homeownership fell from 30% to 23%, while rural ownership saw a slight decrease from 88% to 86%. Renting households rose from 36% to 39%, with many millennials shifting investment priorities and favoring urban rentals. Despite government housing initiatives, high mortgage rates and limited affordability have hindered progress, leaving urban centers like Nairobi with only 7.7% homeownership rates. The trend highlights growing housing challenges as urbanization accelerates as reported in the BusinessDaily.

New vehicle sales in Kenya slowed in 2024 due to high taxes, reduced government purchases, and tough economic conditions. Data from the Kenya Motor Industry Association (KMIA) indicates that 11,059 units were sold locally, down from 11,370 in 2023 and 13,352 in 2022. Second-hand imports continued to dominate the market due to affordability. According to The Star the slowdown was driven by reduced spending power, higher interest rates, and delayed payments to sectors like construction. Despite challenges, dealers benefited from steady demand in transport, construction, agriculture, and retail, with trucks (3,939 units), pickups (3,133), buses (1,205), and prime movers (522) leading sales. Isuzu East Africa retained market leadership with 47.5% of total sales, followed by CFAO Motors Kenya (33.4%) and Simba Corp Limited (8.6%)..

Kenya's office space sector is grappling with a 34.4% vacancy rate, as hybrid work models and cost-cutting measures reduce demand. In 2023, office spaces made up 63.3% of advertised commercial properties but had the lowest lease uptake, with only 65.6% occupied. Comparatively, malls achieved 98.3% occupancy, and industrial spaces saw 81.8%. Shifting work trends, driven by the pandemic, have forced businesses to downsize office usage, posing a challenge for investors in commercial real estate as reported in the Business Daily.

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Public finance experts, including KRA Chairman Ndiritu Muriithi, are calling for a shift in Kenya's tax regime to promote predictability and ease compliance. The Standard reports that they propose eliminating the annual Finance Bill's introduction of new tax measures, which has historically disrupted business planning and fueled public dissatisfaction. These sentiments follow protests against the 2024 Finance Bill, which was withdrawn after widespread backlash. Experts argue that long-term fiscal strategies and consultative policymaking are essential for fostering a stable tax environment and improving economic confidence, as the Treasury struggles to meet ambitious revenue targets amidst calls for tax policy reforms.

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In a report by the Business Daily, Kiharu MP Ndindi Nyoro's stake in Kenya Power surged from Ksh33 million to Ksh210 million in six months, fueled by a 322% rally in the stock price. Nyoro, the largest individual shareholder with 30 million shares, benefited from the company’s robust turnaround, including a Ksh30 billion profit in 2024 and a dividend payout of Ksh0.70 per share. His gains highlight the potential of investing during market downturns. Other top shareholders and parastatals like KenGen also saw significant gains, reflecting renewed investor confidence amid improving corporate performance and declining government bond yields.

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