Construction Cost and the Growth in Supply of Real Estate Housing in Kenya
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Date
2016
Authors
Ngugi, Samuel Mungai
Wamugo, Lucy
Journal Title
Journal ISSN
Volume Title
Publisher
AJPO Journals
Abstract
Purpose: The main purpose of this study was to establish the effects of construction cost on the growth in supply of real estate housing in Kenya.
Methodology: The study adopted a descriptive research design. The target population was 78 registered real estate companies in Kenya. The sample size was therefore 39 registered real estate companies in Kenya. Primary data was collected through the administration of the questionnaires
Results: The study found that finance cost, cost of building materials, cost of land and tax cost have a statistical and negative influence on the growth of supply of real estate housing. The study also concludes that increase in growth of real estate market despite the high interest rate could owe to the price inelastic demand for housing owing to economic disparity in the country. While low income earners, who are majority, are pushed away to less glossy and crowded homes where survival supersedes luxury, the upper middle income purchase of housing units is on the upward spiral.
Unique contribution to theory, practice and policy: The study recommended that the government should lower interest expenses so as to encourage the increase in supply of affordable real estate housing. The bank should also lower their interest rates so that the real estate firms can be able to increase the supply of housing. The study also recommends that investors should consider investing in the real estate market despite the erratic interest rates.
Description
An Article Published in American Journal of Finance
Keywords
Construction cost, Supply, Growth, Real estate