Determinants of House Construction Cost in Kenya: A Case of Nairobi County
Abstract
The provision of decent houses in Nairobi to majority of the population is facing serious
challenges of affordability and accessibility. This has resulted to high prices and
shortages of houses to the majority of the population. These twin challenges have been
attributed to the cost of building the houses. The purpose of this study was to establish
the determinants of house construction cost in Nairobi County. To achieve this, specific
objectives were to determine the influence of finance, building materials, labour, land
and infrastructure cost on construction cost of the houses. In addition, to establish
possible strategies and initiatives that can be implemented to make construction cost of
house affordable. In order to achieve these objectives the researcher used theories of
finance and adapted the Fisher-Di Pasquale-Wheaton model as a constructive tool to
explain the basic concepts and interactions between the real estate-market and the
financial market. The study evaluated how significant the relationship each of these
determinants has with the house cost. The study adopted a descriptive research survey
where seventy structured questionnaires were distributed among three categories of
professionals in the housing sector. The target population of this study was one hundred
and sixty (160) professionals firms in the housing industry and registered with their
respective associations as at 31 st December 2013. A sample of 70 professionals was
randomly selected in proportion to what each professional group had with the study
population. This study utilized a self-administered questionnaire as a tool of collecting
data. The data was analyzed using mean and standard deviations and Pearson
correlation analysis. The study found out that land, building materials and infrastructure
determinants have the most influence on the housing cost in Nairobi Kenya. Each of these
determinants registered the highest average mean score and had a strong positive
relationship with house cost with an equally high level of consensus among the
respondents. The study also found out that there are possible strategies and initiatives
that can be implemented to reduce the cost of constructing houses which includes
Private-Public-Partnership, Government facilitation and use of alternative building
technology. Based on these findings, this study concluded that the most influential
determinants of cost of constructing a house in Nairobi, Kenya are land, building
material and infrastructure costs. The study also concludes that there is need for the
government to create an enabling environment for private sector to supply houses in
Nairobi. The study therefore recommended implementation of a number of strategies and
initiatives to make the houses accessible and affordable to most of the population in
Nairobi, Kenya namely; encouraging Public-Private-Partnership, Government offering
incentives and enabling regulatory and business environment to private sector
participation and adoption of new alternatives building technologies by the professionals
in the housing sector.
Publisher
University of Nairobi