, NAIROBI, Kenya, Apr 23 – House prices in Kenya increased by 2.75 percent during the first quarter of 2015 compared to the previous quarter’s 2.18 percent increase.
This is according to the latest Kenya Bankers Association Housing Price Index KBA-HPI, which notes that although this increase is minimal, it represents an upward trajectory going forward.
“There was softening of the price movements for bungalows and maisonettes, with demand and supply dynamics pointing towards apartments significantly accounting for slight movements upwards during the quarter,” KBA Director of Research and Policy Jared Osoro explains.
The slight growth in cost of housing during the quarter under review represents a reversal of the previous quarter’s state where bungalows were the main drivers of price movements with costs for maisonettes and apartments being stable.
According to the Housing Price Index, the movements reveal the underlying demand-supply market conditions, with instances of price rise implying increased effective demand for the given units available in the market.
They also reveal the linkages especially between bungalows and apartments especially in the high end of the market where the demand for bungalows hinges on the desire to redevelop the property into apartments.
Meanwhile Osoro says during the first quarter of 2015, the size of the house was a key price driver.
“This can be inferred from demand for the houses offered in the market that was influenced by a significant extent on number of bedrooms, bathrooms, and whether a house has a backyard and domestic staff quarters,” he explains.
The size of the house also featured prominently in influencing house prices during the fourth quarter of 2014, except that demand for houses available in the market then revealed a preference of fewer bathrooms for additional bedroom.
Other factors that influenced the price of the houses include the size of the land the house was sitting on, social amenities in the neighbourhood, amenability of the house to re-development and security.
“There is evidence that demand for houses on offer were influenced by the taste of the increasingly discerning households. Ease of access to social amenities and preference of gated communities speak to the search for convenience and security by home owners,” Osoro Said
KBA-HPI was launched in February 2015 to provide market players and policy makers with an improved analytical tool that is useful for tracking the housing sector based on locational and qualitative and quantitative characteristics that influence pricing.