NAIROBI, Kenya, Oct 2 – Prices of real estate fell by 1.4 percent in the second quarter of this year and dropped by another 2.2 percent in the third quarter according to research done by a local real estate company.
During the launch of the city’s first property price index, Hass Consult Real Estate attributed the drop to the 2007 post election violence coupled with the global economic downturn.
The Hass Consult property price index showed the trend in housing prices for the city’s upper and middle income town houses.
Jenny Luesby, a consultant with the estate agency, explained that house prices rose in early 2007 onwards by more than four percent until the end of 2008.
“At the end of 2006, the average property price in the suburbs covered was Sh15.7 million and by the end of 2008, it was Sh20.2 million. Rising house prices went up by a further 2.3 percent in the first quarter of 2009 to 20.4 million shillings but went down to 19.9 million shillings in the second and third quarters of the year,” noted Ms Luesby.
She stated that the pricing index was based on closing sales price over the past five years and on the offer price of properties from 13 other estate agencies.
“We concentrated on town houses, villas and apartments in Karen, Kileleshwa, Kilimani, Lavington, Nyari, Riverside, and Westlands and excluded properties with further development potential (these being houses with land of half an acre or more where zoning allows further development),” she explained.
Land Manager Farhana Hassanali said the price index was set to equip investors and any interested real estate developers with knowledge that would help them make and select the best time to invest in property development.
“For any real estate agency, it is very easy to make a sale today. But it is not today’s sales that we should be interested in. What any good estate agent wants is to be able to sustain their sales for the next five to 10 years. The only way you can do that is by allowing your buyers to make informed decisions. If the market is taking a dip, let the buyers know it is taking a dip,” she said.
Nathan Luesby a consultant with the estate agency added that the estate agency’s research move would be welcome for investors.
“It is also important for any investor looking for a long term investment. How do you gauge the potential of the market? How do you gauge whether a property’s location is going to deliver you good returns on your money? Up until this point in Kenya you couldn’t. It was only speculation,” he observed.
Ms Luesby added that the firm would provide accurate and timely housing data for free.
“If you put out three-year-old data, people will make decisions based on things that happened three years ago. That would beat the whole purpose. In our case, every time a sale is closed, its data will go into our database on which we run our index model. We will therefore monitor the figures coming in and they will only be a few days old,” she observed.
The price index model was based on the United Kingdom’s model that is used to provide housing data in the UK. Hass Consult could however not disclose its sample size. Its property index will be published quarterly and will continually increase the market covered. The public is encouraged to disclose data to help build the sample size.