This archive report was first published on 25 November 2019.
According to the Kenya Bankers Association House Price Index (KBAHPI), house prices in Kenya declined by 2.28% in the third quarter of 2019, marking the first time since the last quarter of 2014 that prices have fallen.
The decline is attributed to a weakening in both supply and demand, with the KBAHPI noting that the sustained decline is an indication of an emerging trend where prices have transitioned from a continuous positive trend.
‘If the price softening is sustained into the last quarter of the year and going forward, it will be a pointer to a market correction that comes after a long streak of house price increases,’ the index notes.
On the supply-side, the 25% increase in housing units transacted during the quarter were largely a reflection of supply spillovers from the second quarter rather than new properties entering the market.
‘Lastly, households’ disposable incomes remain constrained,’’ said KBA Research and Policy Director Mr. Jared Osoro, highlighting the tight credit conditions and constrained disposable incomes as key factors contributing to the subdued outlook.
Apartments continued to dominate buyer preferences in the housing market, suggesting predominance of the middle-income segment of the population.
The KBA-HPI inter-quarter sub-regional findings show significant downside price movements, with apartments in region 2 registering the highest decline compared to region 1 even as price appreciations were registered for bungalows in region 1.
