House prices are still in the negative territory albeit with a trend that signals stabilization following a sharp reduction seen in 2019.
According to the Kenya Bankers Association – House Price Index (KBA-HPI), house prices contracted by 0.20 percent in the three months ended June, marginally reversing the deceleration from the 0.51 percent contraction recorded between January and March.
Despite still being on the negative side, the growth of house prices points to a stabilizing market with the outlook broadly reflecting the prevailing economic challenges, which have continued to adversely influence both the supply and demand sides of the housing market.
According to the report, with demand remaining depressed, the concluded sales during the second quarter of the year represented a nearly 40 percent drop from the previous quarter.
” While demand during the quarter was muted due to a weak economy, the price movements were not drastic, partly due to the characteristic tendency of house prices to resist reductions. In addition, the sharp decline of house prices experienced in 2019 discouraged investments in the housing market in what the Index attributes to the limited supply of units, compounded by the low demand,” reads the report.
“While showing positive growth during the first quarter of 2020, the broader construction and real estate sector manifested the weakness in the broader economy with its expansion of 5.3 percent being 0.38 percentage points lower than a similar period last year,” said KBA Chief Executive Officer Dr. Habil Olaka.
Further, the Index notes that house price drivers in the second quarter of 2020 remained largely stable and similar to previous quarters with plinth area, number of bedrooms, bathrooms, and region house is located playing a significant role in the uptake of homes.
On preferences, apartments regained dominance at 75.6 percent of the concluded transactions, more than doubling the 33 percent reported in the previous quarter.
They were followed by bungalows and maisonettes, both accounting for a 12.2 percent.
“The above dynamics: a rise in both the demand for apartments and bungalows and a decline in maisonettes is suggestive of a market leaning more in search for affordability among home buyers,” notes the KBA-HPI.
