By Benadeta Mwaura - Reporter
Kenya, July 21, 2026 - The cost of putting up homes, commercial buildings and infrastructure projects in Kenya continued to rise during the second quarter of 2026, with new data from the Kenya National Bureau of Statistics (KNBS) showing construction costs increased by 5.73% compared to the previous quarter, piling fresh pressure on developers, contractors and prospective homeowners.
The increase, largely attributed to higher transport and fuel costs, comes at a time when Kenya is grappling with elevated energy prices, expensive logistics and persistent inflationary pressures that continue to ripple across nearly every sector of the economy.
According to the KNBS Construction Input Price Indices for the second quarter of 2026, the Building Cost Index rose from 119.77 in the first quarter to 126.06, while the Civil Engineering Cost Index climbed from 123.13 to 130.18, reflecting broad-based increases in the cost of delivering both private and public construction projects.
The report attributes much of the increase to higher prices for transport and fuel, two critical components that influence virtually every stage of construction, from moving cement, steel and aggregates to construction sites to operating heavy machinery and transporting labour.
The latest figures suggest Kenyans planning to build homes could face significantly higher project costs in the coming months unless fuel and transport expenses ease.
Construction experts note that fuel costs affect almost every building material because most products, including cement, steel, timber, roofing materials, tiles and aggregates, must be transported from manufacturing plants or quarries before reaching construction sites.
As transport costs increase, suppliers typically pass the additional expenses to contractors, who in turn adjust project quotations to preserve their profit margins.
The result is that the overall cost of constructing residential houses, apartments and commercial developments continues to climb even when the prices of individual construction materials remain relatively stable.
The increase also presents fresh challenges for the government's affordable housing programme, which relies on controlling construction costs to deliver units within reach of low- and middle-income earners.
Higher input costs mean contractors may require larger budgets to complete projects unless efficiencies are introduced elsewhere in the construction process.
Private developers are similarly expected to review pricing for new housing developments, potentially making home ownership even more difficult for first-time buyers.
Industry analysts warn that sustained increases in construction costs could also slow new investments in real estate as developers reassess project viability and financing requirements.
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The impact extends beyond residential housing.
Roads, bridges, railways, water projects and public buildings all rely heavily on diesel-powered equipment and large-scale transportation of construction materials.
An increase in construction input prices therefore raises the overall cost of implementing public infrastructure projects and may require governments to revise project budgets or extend implementation timelines.
Contractors executing fixed-price contracts may be particularly exposed if rising costs cannot be recovered through contract variations.
The latest KNBS report once again highlights how fuel prices remain one of the biggest drivers of Kenya's construction sector.
Beyond powering heavy machinery, fuel directly influences the movement of imported materials through ports, inland transportation, distribution networks and on-site operations.
With logistics accounting for a significant share of construction expenditure, fluctuations in fuel prices often have an immediate effect on the final cost of building projects.
Unless transport costs moderate, industry players expect construction prices to remain elevated in the second half of the year, potentially affecting housing affordability, infrastructure delivery and investment decisions across Kenya's real estate sector.