Abstract
Purpose: The main purpose of this study was to establish the effects of construction cost on the growth in supply of real estate housing in Kenya. Methodology: The study adopted a descriptive research design. The target population was 78 registered real estate companies in Kenya. The sample size was therefore 39 registered real estate companies in Kenya. Primary data was collected through the administration of the questionnairesResults: The study found that finance cost, cost of building materials, cost of land and tax cost have a statistical and negative influence on the growth of supply of real estate housing. The study also concludes that increase in growth of real estate market despite the high interest rate could owe to the price inelastic demand for housing owing to economic disparity in the country. While low income earners, who are majority, are pushed away to less glossy and crowded homes where survival supersedes luxury, the upper middle income purchase of housing units is on the upward spiral.Unique contribution to theory, practice and policy: The study recommended that the government should lower interest expenses so as to encourage the increase in supply of affordable real estate housing. The bank should also lower their interest rates so that the real estate firms can be able to increase the supply of housing. The study also recommends that investors should consider investing in the real estate market despite the erratic interest rates.
Highlights
1.1 Background of the StudyTitle to real estate normally includes title to air rights, mineral rights, and surface rights which can be bought, leased, sold, or transferred together or separately (Geltner et al, 2013)
The study concludes that increase in growth of real estate market despite the high interest rate could owe to the price inelastic demand for housing owing to economic disparity in the country
The bank should lower their interest rates so that the real estate firms can be able to increase the supply of housing
Summary
1.1 Background of the StudyTitle to real estate normally includes title to air rights, mineral rights, and surface rights which can be bought, leased, sold, or transferred together or separately (Geltner et al, 2013). Real estate can be defined as the land and its permanent improvements. According to Harvey (1981), real estate refers to a particular type of good, land or resources that is not physically movable. According to Ögütçü (2002) the real estate sector continues to grow immensely highlighting the rising demand and investor confidence in the entire sector. The fund invests primarily in real estate investment trusts (REITs). Investors can invest directly in physical real estate or choose to invest indirectly through managed funds. Investing directly in real estate involves purchasing the residential or commercial property to use as an income producing property or for resale at a future time. Due to the higher liquidity available in the market, the lower transaction costs and lower capital requirements, average investors prefer to indirectly invest in real estate
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