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Property prices set to drop in Nairobi

NAIROBI, Kenya, Jan 20 – House prices in Nairobi’s upper and high-end market are set to stabilise after two years of consistent rise, a new housing index shows.

The Composite Index and Hass Property Index developed by property Firm Hass Consult shows a steady increase in house prices from mid 2006 to 2008 and started levelling off heading towards 2009.

Both indexes indicate that the high-end property market was undergoing a market correction after an initial bubble burst in 2006.

“After some downward correction in sales prices and with some downward correction in asking prices in, we noted that sales prices themselves stabilised in the fourth quarter and the volume of activity improved notably,” Property Development Manager Farhana Hassanali said.

Analysts at the firm also revealed that property prices realised in the fourth quarter of 2009 could come tumbling down as effects of the financial crisis slowly wear off.

The dip however created an appetite among buyers as the number of those interested in buying homes surged upwards.

The Composite Index also shows high-end residential houses prices hit by flat or falling demand for the better part of last year and into this year.

“Diaspora remittances have dipped due to job loses or salary cuts, which has had a significant impact on real estate,” Hassanali said.

The Hass Composite Index constitutes data drawn from established estate agencies in Nairobi, encompassing sales data over the last five years.

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Analysts at the firm however revealed that compiling housing data was particularly difficult as not every property firm was forthcoming with data that would give a more reflective indicator.

“Our wish is that other property firms make available their data so we can all develop a more comprehensive index that looks at even the low end market as well as other regions,” Nathan Luesby said.

The data does not include properties with development potential or land plots, but town houses, apartments and villas.

The Index showed that in general, sale of houses in Nairobi rose marginally during the second and third quarters before a sharp downward correction of 3.2 per cent in the fourth quarter.

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