Kenyans’ taste for apartments grows

Amid depressed house prices for the better part of last year, a majority of Kenyans who went into the market opted for apartments.

This is according to the latest Kenya Bankers Association (KBA) Housing Price Index (HPI) that shows 74 per cent of homebuyers in the last quarter of last year went for apartments.

The figure was, however, a drop from 85 per cent in the third quarter. 

Preference for maisonettes, on the other hand, rose from 10 per cent in the third quarter to 17 per cent in the fourth quarter, while preference for bungalows stopped at nine per cent.

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More spacious houses, those with more bathrooms and bedrooms, attracted higher prices.

The location of houses, as well as the number of floors, also affected the prices, with few-floored, low-density ones also attracting higher prices.

According to the report, house prices generally dipped in the four quarters of 2019, signalling tough economic times that characterised the year.

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KBA said in the report released last week prices moved from a HPI value of 123.56 in the first quarter to 121.47 in the second, 118.76 in the third and 118.04 in the last.

This is gauged against a base of 100 that was set in the first quarter of 2013.

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An elevated level of non-performing loans in the real estate and the construction sector, which constricted the private sector growth, was blamed for the negative trend.

A rising distressed properties overhang, according to the report, forced home sellers to reduce asking prices of their properties.

“This negative feedback loop has clouded the house market outlook and led to price rediscovery in favour of a downward correction,” said KBA Director of Research and Policy on Financial Markets Jared Osoro.

Mr Osoro said there was a sustained five-year market correction that came with modest price increases.

The KBA report echoes an earlier HassConsult Property Index that indicated a consistent fall in apartment prices in Nairobi’s suburbs in the last quarter of 2019.

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According to the HassConsult report, prices of apartments in Kilimani, Lang’ata, Lavington, Parklands, Upperhill and Riverside fell, while those in Kileleshwa and Westlands registered a slight improvement.

In the satellite towns, prices for Athi River, Kiambu and Ongata Rongai fell, which according to Head of Development, Consulting and Research at HassConsult Sakina Hassanali, was unprecedented.

“The fall in prices in satellite towns, the first of its kind, shows that investors are holding off buying decisions, which is a defensive strategy taken where there is economic uncertainty,” she noted. But in both instances, rents dropped significantly.

House prices in the suburbs showed little change, with Ridgeways recording the biggest improvement (2.9 per cent), while Runda registered the largest drop at -1.6 per cent.  

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