House prices defy credit crunch, polls to post growth

KBA Director of Research and Policy Jared Osoro. (Photo: Courtesy)

House prices rose marginally in the third quarter, defying tough liquidity pressures and the long electioneering period.

According to the latest housing price index from the Kenya Bankers Association (KBA), prices across the country rose by a marginal 0.42 per cent between July and September 2017.

Apartments registered the largest demand, accounting for 82.66 per cent of the total units sold in the quarter with maisonettes and bungalows taking 10.7 per cent and 6.64 per cent.

The demand across the lower, middle and upper market segments helped push up the prices of apartments by higher margins compared to bungalows and maisonettes, with the rise in prices in the latter two segments remaining muted.

Affordability

“The rise in the price of apartments compared to bungalows and maisonettes signals an element of the search for affordability by potential home buyers given the lower cost of construction per unit on the developers’ side and, therefore, relatively low offer process,” said KBA Director of Research and Policy Jared Osoro.

“As a consequence, market activity appears to be skewed towards the lower end compared to the middle and the upper market segment.”

KBA, however, said the increase in prices was the lowest in three years largely owing to the lengthened election period and the capping of interest rates.

“With the generally depressed demand in the economy and the slowdown in credit expansion, households relying on the credit market towards home acquisition have been adversely affected,” said Mr Osoro.