Economy

House prices rise at fastest pace in over three years

houses

The Langata phase VI homes. PHOTO | FILE

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Summary

  • House prices in Nairobi’s upmarket neighbourhoods have increased at the fastest pace in three years.
  • Higher demand for homes in Langata, Loresho, and Kitisuru have seen these estates lead the market in annual price gains.
  • Data by realtor HassConsult shows that on average a house now costs 3.1 percent more in the city’s suburbs compared to September last year.

House prices in Nairobi’s upmarket neighbourhoods have increased at the fastest pace in three years, reflecting economic recovery that has unlocked credit and investments in real estate.

Higher demand for homes in Langata, Loresho, and Kitisuru have seen these estates lead the market in annual price gains, helped by ongoing improvements on road infrastructure and relatively lower prices in comparison to adjacent areas.

Data by realtor HassConsult shows that on average a house now costs 3.1 percent more in the city’s suburbs compared to September last year, outperforming the two percent gain recorded in the year to September 2020 and a contraction of 2.6 percent in 2019.

This is the fasted increase since September 2018 when the growth stood at 3.3 percent, reflecting property market recovery from Covid-19 economic hardships.

The real estate sector was among the worst hit by the economic fallout of the pandemic as orders by new house buyers dried up, largely due to income loss as people lost jobs, cautious lending by banks, and investors choosing to keep their cash in hand as they rode out the economic uncertainty.

Semi-detached houses and apartments in Langata emerged as the most sought-after in the city over the period, helping the estate record the highest annual price increase at 13.5 percent to an average of Sh32.4 million per house.

Access to Langata is expected to improve with the completion of the Nairobi Expressway and the construction of the Langata Road-Raila Odinga Way interchange, while the suburb’s lower-priced houses are also fuelling demand.

On the other hand, more expensive apartments in areas such as Kilimani, Kileleshwa, and Westlands have seen their prices drop in the last year.

The ongoing improvement of the ABC-Rironi highway and the recently opened Westlands-Redhill link road have also helped push up prices in Loresho, where the cost of a house rose by 7.1 percent to Sh53.4 million.

“We are seeing buyer confidence in the apartment market along the Nairobi Expressway because there are expectations that completion of the project will bring these areas closer to the city by cutting travel time. It is important to note that proximity is a factor of how fast you can arrive at your destination and not the physical distance,” said HassConsult head of development consulting and research Sakina Hassanali.

Kitisuru which, alongside Runda and Gigiri, attracts expatriates linked to the UN complex and foreign embassies, recorded a house price gain of six percent to an average of Sh87.1 million.

It outperformed nearby estates such as Runda (0.7 percent), Nyari (-0.9 percent), and Gigiri (0.7 percent) where houses on average are more expensive, costing between Sh94 million and Sh120 million.

Gigiri remained Kenya’s costliest neighbourhood with average home prices set at Sh121.4 million

HassConsult lists average house prices in Nyari estate at Sh105 million, making the neighbourhood the second most expensive in the city.

Nyari is followed by Runda (Sh94.6 million), Karen (Sh90 million), Kitisuru (Sh87 million) and Muthaiga (Sh84.7 million).

The recovery of the economy has also helped house prices go up, with more jobs now being recovered following the gradual reopening from the restrictions put in place to contain the spread of Covid-19.

Following a contraction of 0.3 percent in 2020, the economy grew by 0.7 percent in the first quarter of this year and 10.1 percent in the second quarter.

This rebound has given house buyers the confidence to invest in real estate, while developers are also able to move ahead with projects due to the prospect of a revival of the rental market.

In Nairobi’s satellite towns, however, house sale price gains have been more modest, largely because most people settling in those areas prefer to build their own units.

Ruiru recorded the biggest house price increase in the year to September at 8.3 percent to Sh14.2 million, with Juja recording the biggest decline at -6.9 percent to Sh10.8 million.

In contrast to house prices, the cost of land in these satellite towns have risen faster than those in the suburbs, fuelled by demand from those looking to build their own homes affordably.

On average, they grew at 5.5 percent in the one year to September, led by Kiserian whose price per acre rose by 18.2 percent to Sh8.7 million, and Mlolongo at 13.9 percent to Sh37.1 million per acre.

But land prices in the city, which are beyond the reach of Kenya’s working class, grew at a slower rate of 0.3 percent as developers sought cheaper options outside the capital.

An acre of land in Upperhill is the most expensive in the city at Sh509.7 million, followed by Westlands and Kilimani at Sh423.4 million and Sh413.1 million respectively.