NAIROBI, Kenya, Jul 28 – Bankers have expressed concern over the impact of the interest rate capping on the real estate sector.
Kenya Bankers Association CEO Habil Olaka says that banks have been hesitant to issue loans, which has, in turn, cut down the number of properties bought.
At the same time, the cap has placed constraints in the banking sector making it hard for developers to put up new projects.
These events have been on the back of the slow growth of the Kenyan economy.
“The market demand attributes have continued to influence the supply side of the housing market. They point to the fact that a number of developed units remain unsold for a longer period,” Olaka said during the release of KBA’s Housing Price Index.
Overall, the residential property prices continued to increase at a modest pace during the second quarter of 2017.
The average house prices in Kenya recorded a minimal increase of 0.98 percent compared to 1.10 percent rise in quarter one 2017.
“This is the slowest price increase since the third quarter of 2016,” Olaka said.
According to KBA Director of Research and Policy, Jared Osoro, the demand attributes of the housing market have largely been influence by the sustained decline in the pace of credit growth in the private sector.