Determinants of supply of real estate finance in Kenya
The purpose of the study was to investigate the factors affecting real estate finance supply. It was important to verify the reasons why housing finance are not being supplied by the financial intermediaries readily. Could it be that potential borrowers are not approaching the financial institutions to source for housing finance or is it that the lender’s requirements are so stringent that individual’s cannot meet up with this lender’s requirements. The study was carried out as a survey of real estate developers, real estate owners and financiers operating in Kenya as of 31st December 2011. The sample size was made up of 30 real estate developers, 30 home owners and 10 housing financiers. It was considered necessary and important to obtain information using questionnaire in extracting information from users of real estate finance in Kenya at the time. The data collected by means of the questionnaire survey, was analysed and conclusions were used in discussing all factors that affecting supply of real estate financing in Kenya. There were revelations about the situation in the supply of housing finance in Kenya. In lending, financial institutions give out loans in consideration of interest to be charged on the loans and the riskiness of the loan. The ability of financial institutions to lend for housing (supply of housing finance) determines the quantity of housing finance that could be supplied for house acquisitions. The research identified these factors; value of property, government regulation, income level, interest rates and loan security do affect the availability and supply of housing finance will be reduced. The efforts by the government to ensure faster clearances for active real estate development would enable developers in a great way. The researcher recommends that the government should streamline the various real estate policies in different ministries into a single guide and to set up a separate real estate division within the ministry with the objective of running a single window clearance of all required paper work and clearances. Also the government should establish a housing loan guarantee scheme run by existing government housing corporations to assess risks in some real estate development and the applicant’s credit scores then giving guarantees to the developers and financiers so as to encourage financiers to lend more and at affordable interest rates.