House prices remained in the negative zone for 15 consecutive months even as buyers’ tastes shifted from apartments to townhouses, according to a new survey.
The house price index by the Kenya Bankers Association (KBA) showed that prices dropped by 0.54 per cent in the first three months of the year, extending a downward streak in major towns around the country to 15 months.
But even with a slump in prices, houses in areas such as Kileleshwa, Kilimani, Westlands, Spring Valley and Riverside in Nairobi continued to attract high demand with eight out of 10 deals that were closed between January and March being concluded for homes in this cluster.
Houses in Runda, Karen, Garden Estate, Parklands, Ridgeways, Muthaiga, Loresho and Kitisuru also fetched higher prices, according to the index which tracks housing sector dynamics and price movements.
Outside of Nairobi, the ‘hot cakes’ included Nyali in Mombasa, Milimani in Kisumu, and Milimani in Nakuru.
However, it was different for Imara Daima, South B, South C, Komarock, Waiyaki Way and Buruburu where house prices were subdued with only seven per cent of transactions being done in these areas.
The cluster that recorded the second highest number of transactions at 16 per cent included Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi and Kahawa Wendani.
The price slump, however, was also the lowest contraction, an indicator that the housing market was inching closer to a correction where demand and supply balance.
“The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterised by a sign of normalisation of house prices as the market comes into balance after a prolonged period of sustained price growth,’’ said KBA Research and Policy Director Jared Osoro.
According to the index, the marginal easing - where house prices decelerated at a slower rate than the previous quarter - was due to increased demand from buyers, a boost to developers.
The data for the quarter was based on concluded sales, which rose by 13.95 per cent for townhouses.
Demand is also shifting from apartments to townhouses - single family homes, usually two stories and which share a wall with independently owned houses.
Transactions in townhouses all over the country increased by 45 per cent, but they doubled in the first cluster.
A third of the transactions were of apartments while transactions for bungalows and maisonettes were 12 per cent and 10 per cent respectively.
The real estate sector has been subdued for some time following an extended period in which prices kept increasing as demand outstripped supply.
Attracted by the envious prices, developers swooped for the kill, turning every other space in major towns into construction sites.
With more houses being constructed than people could afford, prices started going down even as some houses were auctioned.