There seems to be a suspicious trend whereby prices of land in satellite towns that surround Nairobi are nose-diving. My intention was to apply for a development loan from my Sacco and buy a plot in the second quarter of the year before the Coronavirus pandemic struck. I had already identified a plot in Syokimau and negotiated the price with the seller, but resolved to put the purchase on hold following uncertainties that would arise from the pandemic. Last month, I was shocked at how prices of plots had fallen in the area leading to suspicions whether there were sinister games played by the agents. I have heard from colleagues and friends that similar prices of plots have fallen in areas like Kiserian and Kiambu among others. Is the experience similar in the West?
Prices of plots have generally fallen in many satellite towns that surround Nairobi, mainly over reduced demand due to negative economic effects of the Covid pandemic. However, it is good to ask questions whenever you bump into property that sells way below the known market price as most fraudsters lure unsuspecting buyers with low prices.
According to the latest report by HassConsult, which collects data on property prices, land prices are not increasing as there is no meaningful demand to propel prices to the roof. The report indicates that the fall in prices recorded over the past six months affected satellite towns like Kiambu, Syokimau and Kiserian where prices have dropped by nearly 10 percent.
The report further indicated that the price of an acre in Kiambu dropped by the largest margin of 8.1 percent to Sh39.7 million in September compared to Sh43.2 million in March. In Syokimau, land prices fell 3.14 percent to Sh21.6 million while in Ruiru, asking prices dropped 3.03 percent to Sh25.6 million over the six-month period.
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However, the story was different in some areas like Ngong’ which reportedly continued to record a rise in prices. According to international housing analysts, the fall in property prices will also be evidenced in the West as Government stimulus to cushion citizens over Covid ends.
For instance, it is projected that over 20 percent of the 110 million tenants in the United States of America risk eviction as moratoriums on rent payments over Covid-19 restrictions begin to end.
Analysts for global ratings agency Fitch Ratings concluded that Spain will suffer the biggest fall in house prices, down between eight and 12 percent by the end of the year while prices in Australia are expected to lose between five and 10 percent compared to the United Kingdom that is projected at seven percent.
According to analysts in the West, a nose-dive in house prices would dent asset wealth, lower borrowing capacity of homeowners and undermine investment in productive parts of the economy. On the flipside, it would also relieve pressure on those suffering from lower real wages, unemployment and rising rent.