Factors Affecting Housing Supply In Nairobi County, Kenya

Abstract

This study looks at the factors that affect housing supply in Nairobi County, Kenya. The selection of factors to study was based on those factors identified by a major review of the literature on housing supply by Garces and Pires (2011); and these factors are: one, construction costs (building cost index); two, financing costs; and three, inflation rate. This study was aimed at determining the relationships between construction costs, inflation rate, financing costs and housing supply in Nairobi County. The study looked at data on these three selected variables affecting housing supply from 1970 to 2016. A descriptive research design that involved a quantitative approach was employed in the methodology. The target population was the residential housing units supplied by the housing market in Nairobi County. The data were collected from secondary sources including various Economic Surveys and Statistical Abstracts prepared by the Kenya National Bureau of Statistics (KNBS), the Central Bank of Kenya (CBK), and the Ministry of Lands & Planning. Statistical software was used to perform trend analysis and to determine the descriptive statistics, stationarity, cointegration, and fitting of the vector error correction model of the variables in the study. The results of this study indicate that there is a negative relationship between construction costs, financing costs and housing supply and a positive relationship between inflation rate and housing supply in Nairobi County, Kenya.