This archive report was first published on 12 August 2019.
Kenya's housing market has been struggling to recover from a six-month slump, with falling household income and limited credit from commercial banks contributing to the decline. According to a recent survey by the Kenya Bankers Association (KBA), house prices have remained subdued for the second consecutive quarter, with a 1.72% decline between April and June.
The KBA's Housing Price Index report, released last week on August 12, 2019, highlights the challenges facing prospective home buyers, including squeezed household budgets due to rising inflation, difficulties in getting credit, and a cautious attitude towards the housing market.
As a result, households have been unable to purchase houses, while developers have struggled to put up new buildings due to limited funding. The number of building approvals fell to 2,238 for the period July to November last year, from 2,252 between January and June the same year.
Despite the challenges, the survey found that flats continued to dominate the market, accounting for 81% of the total units offered during the second quarter. This is a clear indication of the influence of the middle-income segment of the population on the market.
Developers have been forced to build flats to maximise space utilisation, as land pressures have pushed them to focus on building upwards. The survey also found that maisonettes' market share declined to 12.9% in the second quarter, from 23.4% in quarter one, while the share of bungalows declined to 5.9% from 14% during the same period.
Even listed mortgage financier HF Group has been forced to review its home loan business, focusing on the mass market after dropping into loss-making territory due to increasing volumes of non-performing loans and lower interest income on existing loan facilities.
