The effect of savings and credit cooperative societies development loans on the growth of real estate industry in Kenya
According to Central Banks of Kenya (CBK) 2010, The Kenyan real estate finance has grown rapidly over recent years in both value of loans and number of loans. The study is set out with the objective of establishing the relationship between the effects of SACCO development loans on growth of real estate industry in Kenya. To achieve the objectives of the study, a regression model was developed using the Growth of Real Estate Industry in Kenya as measured by Capital Property Prices Indices (CPPI), as the dependent variable and the Development loans granted by SACCOs as measured by Logarithm as the independent variable as well as interest rates as the controlling variable. A descriptive research design was adopted for this study, the study intended to collect detailed information through descriptions that would be useful establish the effects of SACCO development loan on development of real estate in Kenya. The secondary data was collected from published reports by the Central Bank of Kenya (CBK) reports and Real Estate Finance in Kenya: A Survey Analysis for a period of five years between 2006 and 2010. The researcher adopted a survey research design on a target population of all 96 SACCO registered under the Sacco Societies Regulatory Authority (SASRA) in Kenya (SASRA, 2014). The data collected was analyzed using multiple linear regression analysis conducted at 95% confidence level. The study used the regression analysis to establish the relationship between the effects of SACCO Development loans on growth of real estate industry in Kenya. Results also indicate that the goodness of fit was adequate as it reported an r squared of 0.459 which means that 45.9% of the variations in real estate development units was explained by variables that such as Economic Health Situation, Interest rate, and Population growth rate which were substantial to explain the effect of SACCOs development loans on growth of real estate industry in Kenya. It was also possible to conclude that interest rates contributed the largest percentage factor in sourcing finance for firms in the real estate industry. The study recommends that in view of the findings, SACCOs should reduce lending interest rates; have product diversity; customize loans; SACCO Societies Regulatory Authority (SASRA) to form guiding policies; increase repayment period to be extended; educate customers on products and market loan products. Furthermore, Sacco’s should understand and relate to customers care services and levels of customer satisfaction. This would enable the Sacco’s to adjust and understand better how their member’s prefers products.