The Hass Composite Property Index, which catalogues housing prices from all published and formal sector sources, recorded a 0.5 percent increase in house prices driven by some continuing movement in the costs for stand-alone houses, but offset by marginal declines in the asking prices for town houses and apartments.
The number of completed houses was relatively low in the first quarter, when compared with the quarterly activity of the last decade, but were significantly higher than in the first quarters of 2011 and 2012, revealing an underlying strengthening in the sales market.
In a buying cycle that typically gains momentum in the second and third quarters of the year, the volume of new business and viewings also rose sharply from January to March, suggesting an ongoing revival of activity following interest rate cuts and ahead of the election.
Head of Research and Marketing at Hass Consult Sakina Hassanali said, “The election, which represented perhaps the biggest concern for investors of any event in Kenya for the last five years, has created some pent up demand, as investors have held off awaiting the outcome.”
“However, with fears focused on a direct line impact on the Kenyan economy – which like the elections of 2007 had the potential to leave a long tail of suppressed growth – buyers began to position themselves for swift purchasing ahead of further price rises in the event, as happened, that the election passed peacefully,” she added.
The rentals market also slowed down as the elections got into full swing, with asking prices for rentals rising by 1.9 percent on the previous quarter, where they had surged 4.4 percent on the three months earlier in both the third and fourth quarters of 2012.
Hassanali explained that the rental market is yet set to see further price rises, despite limited disposable income among consumers, who currently pay a far higher proportion of their incomes in rent than is the norm globally.
“The push is coming as expensive mortgages tie potential buyers into renting, amid some tightening of rental supplies, and with landlords seeking better returns after almost two years of relative losses,” she explained.