Dealers in the real estate sector continue to witness a lull in the variation of house prices as uptake continues to be constrained by the COVID-19 Pandemic which has significantly affected both the demand and supply side of the market..
The Kenya Bankers Association- House Pricing Index (KBA-HPI) shows the rate of house prices growth from July to September 2020 (Q3 2020) remained in the negative territory registering a 0.08% downward adjustment compared to the 0.20 percent reported in the second quarter of the year.
“Housing price fundamentals, just like prices of non-house goods, substantially depend on the state of the economy. The precipitous softening of the economy and the attendant fall in consumption expenditure, the ensuing income uncertainty and low consumer sentiments induced by the COVID-19 pandemic is having adverse effects on the housing market. This effect is seen on both the demand and supply-side of the market,’’ the KBA-HPI notes.
During the period under review, demand remained weak with concluded house sales levelling off.
Demand for houses remained heterogeneous with the quarter-on-quarter changes in demand for apartments declining by 63 percent while demand for maisonettes and bungalows registering a growth of 72 percent and 9 percent, respectively.
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The KBA-HPI, however, indicates that high demand for units within the top end of the market more than offset the decline in the lower segments, supporting house price stability.
The Index indicates that the observed house prices trajectory has been further influenced by the supply side weaknesses which continue to reveal themselves in softening of such indicators as cement production and consumption, providing the cushioning effect on house price declines, and hence the observed stabilization of house prices.
“As we have argued before, during periods of a sharp contraction in economic activity house prices either remain flat or decline slightly. The fact that the decline is not as sharp is attributable to the slow response of both buyers and sellers in response to the declining economic prospects,’’ observed Kenya Bankers Association Chief Executive Officer Dr. Habil Olaka.
The report further observes that homebuyers’ preferences continue to be dominated by apartments which accounted for 43 percent of the concluded transactions during the first three months of 2020.
