The increase in house prices slowed in the second quarter of this year despite expectations that the economy was on the mend after last year’s polls, according to a new report.
The Kenya Bankers Association (KBA) Index showed that prices went up by 1.76 per cent during the quarter which was lower than the 2.08 per cent registered in the first quarter of the year.
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Prices in the period under review were largely driven by house size, the number of bathrooms, presence of balcony, backyard and master ensuite, with the presence of a separate dining area and swimming pool being significant drivers.
Out of the three types of the houses surveyed, apartments, bungalows and maisonettes commanded a fairly equal market share, with apartments commanding about 38 per cent of the market compared with 33 per cent and 29 per cent for bungalows and maisonettes respectively.
KBA said in the report released Thursday the January spike was a recovery after the tough market conditions in late last year during the contested Presidential election. “The Housing Price Index shows that the cost of acquiring a home stabilised for the first time in the period under review since the first substantial rise in the first quarter of 2018,” said KBA Research and Policy Director Jared Osoro.
The recovery recorded in the first half of 2018 came in the wake of strained market conditions after a series of lower rate in price growth for five consecutive quarters from the fourth quarter of 2016.
This dismal trend was attributed to various factors, including shrinking private sector credit growth and market anxiety as well as political instability that preceded the 2017 General Election.
The sharp increase in quarter one was considered a reprieve associated with transactions from previous quarters that were put on hold due to market anxiety and lower lending risk appetite after the rate cap.