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House Prices Decelerate as Demand Remains Depressed

NAIROBI, Kenya, May 26 – The price of houses continued to decline in the first quarter of 2020 in a trend compounded by constrained ability of potential buyers to afford homes
currently on offer in the market, according to the Kenya Bankers Association House Price Index (KBA-HPI).

According to the Index, house prices decelerated by 0.54 percent in the reviewed period,marginally reversing the decline by 0.07 percent from the 0.61 percent negative growth rate
reported in the fourth quarter of 2019. By the KBA-HPI measure, house prices have remained in the deceleration path for the fifth consecutive quarter.

‘’While the market remained largely depressed, the marginal easing was supported by the supply-demand interaction with a leaning towards more demand in a relative context,’’ the
KBA-HPI indicates, adding that demand shifts in the quarter were based on concluded sales, which rose by 13.95 percent.

The sale numbers point to a market where bungalows accounted for a 33 percent demand increase while the demand for bungalows and maisonettes went down by 95.9 percent
and 57.1 percent respectively during the quarter. The trend, according to the Index, reflects buyers’ adjustments with affordability being a key concern in the housing market.

‘’The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterized by a sign of normalization of house prices as the market
comes into balance after a prolonged period of sustained price growth,’’ noted KBA
Research and Policy Director Jared Osoro.

Other key drivers of prices in the period included geographical location, with houses in Region 3 attracting higher prices as compared to Region 2 and Region 1. (Region 1 includes Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau and Embakasi, while region includes Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai and Waiyaki Way (Uthiru, Regen, Kinoo, Kikuyu) among others.)

Further, homeowners sought a larger plinth area, more bedrooms, and bathrooms, which attracted higher prices.

While the presence of a back-up generator and other amenities attracted higher prices, home buyers preferred low-density buildings. Unlike previous quarters where apartments
dominated house demand, townhouses were the most preferred in quarter one of 2020 at 45 percent followed by apartments ( 33 percent) and maisonettes (12 percent).

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