Investment risk a personal decision

The combination of free flowing credit to speculative as well as first time home buyers with bad credit history, together with lines of credit to property developers leading to an oversupply of housing stock in certain areas boiled over into the property market crash once those lines of credit dried up after the subprime mortgage crisis in 2008.

Is Kenya anywhere near that? Hardly.

Our mortgage market is nascent to say the least, with less than 10 banks providing mortgage financing in the whole country and a negligible percentage of total banking industry credit going towards real estate development.

The current property boom is to a large extent driven by cash buyers, as Kenya is largely a cash economy.

Only when that cash has the propensity to dry up should we worry about a correction or a crash.

Or better yet, if a stronger asset class emerges in the market that provides higher returns than property then we should see the correction.

But what asset class could that possibly be other than the Nairobi Stock Exchange?

Carol.musyoka@gmail.com