Kenya is one of the developing countries trying to provide affordable and decent housing to its residents. Macroeconomic instability persists despite efforts, impeding housing supply from both government and real estate sectors.
This study examines the macroeconomic factors influencing Kenya's housing supply from 1980 to 2024, using time-series data. The augmented Dickey-Fuller and Johansen cointegration tests are conducted, along with the Vector Error
Correction Model, to assess long run relationships between the variables, which allows for the use of the error correction model. Moreover, the Granger causality test examines the causal links between the variables. In the long-run, house prices and economic growth positively impact house supply while inflation rate, interest rate and the government expenditure negatively impact the supply of housing. Short-run analysis reveals a negative coefficient for interest rates. Granger causality testing supports the one-way feedback
hypothesis between interest rate and supply of houses. Study findings suggest that government should explore methods to develop financial products and instruments that make it easier for individuals and governments to finance housing projects and sustain reasonable profit margins. Additionally, managing inflation and interest rates can create a favourable macroeconomic environment
for investors, which positively impacts the housing supply.
Mose, N. (2025). Macroeconomic Determinants of Housing Supply in Kenya. Afribary. Retrieved from https://tracking.afribary.com/works/4070-article
Mose, Naftaly "Macroeconomic Determinants of Housing Supply in Kenya" Afribary. Afribary, 06 Aug. 2025, https://tracking.afribary.com/works/4070-article. Accessed 07 Aug. 2025.
Mose, Naftaly . "Macroeconomic Determinants of Housing Supply in Kenya". Afribary, Afribary, 06 Aug. 2025. Web. 07 Aug. 2025. < https://tracking.afribary.com/works/4070-article >.
Mose, Naftaly . "Macroeconomic Determinants of Housing Supply in Kenya" Afribary (2025). Accessed August 07, 2025. https://tracking.afribary.com/works/4070-article