There is no end in sight for ballooning property prices in Kenya due to the growing demand for quality housing.
Speaking during the release of HassConsult third quarter property price indices, Marketing Manager Sakina Hassanali said the price of houses will keep on rising because the supply of houses is not enough to meet demand. “The house facilities that we have in the country are not enough to accommodate the ever rising population,” she said. “This means that Kenyans will have to wait for longer to see the prices of houses fall.”
The third quarter property price indices reveal a takeoff in asking prices for property, a slowdown in rent rises and a restoration of the high returns on investment in the Kenyan housing market. “The market correction to rents that was flagged off in 2011 as property yields moved to lows of around 7 percent appears to be reaching its conclusion and we are moving to a new period of take-off in sales prices and investment returns,” said Ms Hassanali.
Rents rose by more than 30 percent in the 18 months from January 2012, the report shows, in a steep and continuous upwards trend, but the growth has slowed in 2014 to just 0.4 percent in the third quarter. From the results, the demand for detached houses and apartments is rising with many people buying and renting them out.
“Many people are interested in owning apartments and stand-alone houses for rental income. This trend is likely to continue and from our research we can reveal that asking prices for apartments and detached houses which have been static for a while increased significantly in the third quarter by 3.6 percent and 3.2 percent respectively,” said Jenny Luesby from HassConsult. “Semi-detached house prices are also on the rise and were up by 2.4 percent.”
The Hass composite house price index is based on 4,000 to 6,000 property prices per quarter. Over the last five years since its launch, it has tracked more than 100,000 house price records in Kenya.
“Our property market is moving into a renewed upswing based on the slowdown in new buildings that struck with the high interest rates of 2011 and 2012,” noted Ms Hassanali. “New houses are still going up although now far more apartments than houses and we see nothing yet about the market that heralds instability. The swift and steep rise in rents appears to be levelling off, with landlords now earning restored rental yields as well as bond yields, thus enjoying and appreciating the price appreciation as well.
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