House prices in Kenya increased by 2.75% during the first quarter of 2015 compared to the previous Quarter’s 2.18% increase, according to the Kenya Bankers Association Housing Price Index (KBA-HPI).
KBA Director of Research and Policy Jared Osoro says the trend was characterised by the softening of the price movements for bungalows and maisonettes, with demand and supply dynamics pointing towards apartments. This is a reversal of the previous quarter’s state where bungalows were the main drivers of price movements.
According to the KBA-HPI, the house price movements reveal the linkages especially between bungalows and apartments especially in the high end of the market where the demand for the later hinges on the desire to redevelop the property into apartments.
That accounts for the prices swinging from an increase in bungalow prices during one quarter – in this case the fourth quarter of 2014 – to a decline in the following quarter that is accompanied by a rallying of apartment prices. In essence there is a lag of at least two quarters during the re-development stage.
During the first quarter of 2015, the size of the house was a key price driver. This can be inferred from demand for the houses offered in the market that was influenced to a significant extent by the number of bedrooms, bathrooms, and whether a house has a backyard and domestic staff quarters.
The same attributes featured prominently in influencing house prices during the fourth quarter of 2014, except that demand for houses available in the market then revealed a preference of fewer bathrooms if that will result in an additional bedroom. Other factors that influenced the price of the houses include the size of the land the house was sitting on, social amenities in the neighbourhood, amenability of the house to re-development and security.
“There is evidence that demand for houses on offer were influenced by the taste of the increasingly discerning households. Ease of access to social amenities and preference of gated communities speak to the search for convenience and security by home owners.” Mr Osoro said.
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