Markets & Finance

Shortage hits low-end housing market on developer rent bias


KBA chief executive Habil Olaka and an apartment block in the city’s Hurlingham area. PHOTOS | DIANA NGILA and FILE

The lower end residential housing market has been hit by short supply of units for sale as developers prefer renting to selling, the Kenya Bankers Association (KBA) has said.

While releasing the latest KBA Housing Price Index, the association said the new units being put up are mainly targeting the mid segment of the market.

“The new units being put up in the market are mainly targeting the middle end of the market, with the lower end experiencing supply constraints arising mainly from the tendency of developers inclining more towards renting than selling,” said.

The index showed that prices of homes based on concluded transactions across the country rose by an average of 1.74 per cent in the second quarter of the year compared to 1.4 per cent in the previous quarter.

“The price rise can be characterised as modest at best, portraying a sense of broad market stability,” said the KBA.

In addition to the new units, there has been a gradual opening up of new geographical areas for housing development in response to physical infrastructure expansion, especially transport.

READ: Rising apartments supply stabilise prices

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“The search for secure neighbourhoods with adequate amenities influenced the price movement dynamics during the quarter. Thus, houses in gated communities – often highly priced given the superior ambience associated with controlled development, security, privacy and scenic value – were key influencers of the overall price movements,” read the Index.

This coupled with the proximity to amenities including malls, schools, hospitals and roads has helped increase prices.

“The price movements during the quarter continued with a limited change in preference characteristics during the first quarter of 2016 was reflected in the influencers of price movements remaining to be the size of the house, number of bedrooms, bathroom, and presence of domestic staff quarters,” said KBA director of research and policy Jared Osoro.


In a report on property in the high-end markets carried out in quarter one of the year by property management firm Knight frank indicated that prices of homes in Nairobi were on a growth path.

The rents in the same areas have however seen a decline over the same period.

A survey by another property firm HassConsult also showed a decline in rents in the upper end of the market.

The company’s head of research and marketing Sakina Hassanali said this was due to the oversupply of certain units for rent.