The determinants of private investment in urban housing in Kenya.

Abstract

Kenya's housing sector directly provides w a g e employment and self employment. to many people in Kenya.Others earn regular income's from collection and transportation networks i.e. transporting materials from area of availability to the area of construction , Housing sector is again one of the most important sector in generating income; it accounted for about eight per cent of Kenya's total Gross Domestic Product in 1987. Knowledge of investors' responsiveness to changes in economic

variables is important in formulating housing sector policies.This study attempts to estimate an investment function for the housing sector and how investors are responsive to change in title, construction co s Ls , credible ,housing stoc k , and investmenL lagged o n e year.

Time series data on income, construction cost, credit allocated

to housing, gross investment and total housing stock are used to

estimate the industry investment function. The 1'10del adopted

Eisner and Neal is found to fit the Kenyan data well.

Empirical results suggest that Kenya's housing investors are

,highly responsive to income changes, credit and construction

costs. Some policy implications are then drawn from these results.

Some of these policies are; supply and demand to d eter in the rent rates, the public sector to provide housing services to the, income earners while the private sector is left to cater for the high income earners and that more funds be set aside for the housing sector.