The real estate sector finds itself in a spin as realtors remain stuck with houses that Kenyans are unable to buy despite the glut in the industry piling downward pressure on prices.
According to the Kenya Bankers Association House Pricing Index (KBA-HPI), house prices continued to decline in the first quarter of 2020 completing the deceleration path for the fifth consecutive quarter.
KBA-HPI shows house prices decelerated by 0.54 percent in the period under review, marginally reversing the decline by 0.07 percent from the 0.61 percent negative growth rate reported in the fourth quarter of 2019.
‘’While the market remained largely depressed, the marginal easing was supported by the supply-demand interaction with a leaning towards more demand in a relative context,’’ the KBA-HPI indicates, adding that demand shifts in the quarter were based on concluded sales, which rose by 13.95 percent.
Affordability remains the sector’s achilles heel with sales numbers showing that bungalows accounted for a 33 percent increase while the demand for bungalows and maisonettes went down by 95.9 percent and 57.1 percent respectively during the quarter which represents the inability of Kenyans to afford the houses they would have otherwise preferred.
‘’The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterized by a sign of normalization of house prices as the market comes into balance after a prolonged period of sustained price growth,’’ noted KBA Research and Policy Director Mr. Jared Osoro.
The key drivers of property prices included geographical region with houses in upmarket areas like Loresho and Kitisuru attracting higher prices compared to middle-class areas like Lang’ata, Ngong Road, Ruaka and Kahawa Wendani.
” Homeowners sought a larger plinth area (size), more bedrooms, and bathrooms, which attracted higher prices,” reads the Index.
While the presence of a back-up generator and other amenities attracted higher prices, homebuyers preferred low-density buildings.
Unlike previous quarters where apartments dominated house demand, townhouses were the most preferred in quarter one of 2020 at 45 percent followed by apartments ( 33 percent) and maisonettes (12 percent).