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Apartment sales boost housing sector recovery asKBA survey attributes trend to affordability for home buyers

HOME & AWAY
By Awal Mohammed | March 18th 2021

 

Astoria Apartments in Lavington. [Courtesy ]

The housing sector is slowly shaking off the meltdown occasioned by the Covid-19 pandemic, recording a sharp rise in house prices in the fourth quarter of 2020.

Driving the surge were apartments, whose sales more than tripled in the period compared to the previous three months, according to the Kenya Bankers Association (KBA) Housing Price Index survey released last week.

The survey indicated that housing prices rose by 0.22 per cent in quarter four of 2020, from 0.08 per cent contraction in the previous quarter.

“By house type, our analysis also reveals that prices for apartments rose faster than those of bungalows and townhouses, but were slower than those of maisonettes, reflecting emerging preferences for apartments over other house types due to their relatively lower cost of development per unit,” said KBA Research and Policy Director Samuel Tiriongo.

The survey showed the number of sale transactions on apartments increased five-fold between October and December last year from 57 in the third quarter to 314 units, and two-fold compared to a similar period in 2019.

Buyers’ preference was evident in apartments, which accounted for 71 per cent of the total number of units traded, while maisonettes and bungalows accounted for 23 per cent and four per cent, respectively.

The survey also showed that people preferred to buy apartments in regions like South C, South B, Membley, Waiyaki Way and Langata, while buyers in regions such as Milimani, Runda, Karen, Parklands, Muthaiga and Loresho preferred maisonettes. 

“The rise in the price of apartments compared to bungalows and maisonettes alludes to an element of affordability to potential home buyers, given the lower cost of construction per unit,” Tirongo said.

For the first time, buyers were motivated to purchase the house because of the location unlike previously where the structural factors and plinth area played a huge role.

Additionally, depressed credit to the construction and real estate sector occasioned by the pandemic saw an under-supply of new units, which was attributed to the rise of sales in already completed units compared to the previous periods.

“As evidenced by the dwindling number of new buildings being approved, the under-supply of new units has triggered price rises with the sales being on the already completed units from the previous periods,” said Tirongo.

The increase in sales helped push the sector to post a positive result for the first time in the last seven quarters.

 

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