House prices in Kenya maintained a downward trend in the fourth quarter of 2019, cemented by an overall slowdown in the performance of the economy, which in turn tightened disposable income growth among potential home buyers.
According to an analysis of price movements by the Kenya Bankers Association House Price Index (KBA-HPI), house prices decreased by 0.61 percent compared to the 2.28 percent decline that was reported in the previous quarter.
The Index further associates the sustained decline in prices to an elevated level of nonperforming loansin the real estate and the construction sector, which hasfurther contributed to the prices slump by constricting private sector growth.
In addition, the findings show thatma rising distressed properties overhang continues to have a bearing on house prices, shaping market expectations and causing dealers to align by reducing their asking prices.
“This negative feedback loop has clouded the house market outlook and led to price rediscovery in favor of a downward correction,’’ said KBA Director of Research and Policy on Financial Markets Mr. Jared Osoro.
Speaking in Nairobi on Monday, he observed a sustained five-year market correction albeit with modest price increases.
In the reviewed period, most homeowners’ preferences remained skewed to apartments.
While apartments retained their market dominance, their market share came down from 85 in the previous quarter to 74 percent.
According to the index, preference for maisonettes rose from 10 percent in the past quarter to 17 percent, with bungalows registering a preference rate of 9 percent.
Overall, noted the index, homes with more bedrooms, bathrooms and plinth areas attracted higher prices. On the other hand, buyers preferred low-density buildings, with houses in Region 1 being priced higher than Region 2 and 3.
JK/abj/APA