House prices rose marginally in the final quarter of last year compared with the preceding period on the back of poor credit uptake and prolonged polls that triggered an economic slowdown.
The Kenya Bankers Association (KBA) housing price index released on Wednesday shows house prices rose by 0.68 per cent compared to the third quarter’s 0.42 per cent.
The banker’s lobby linked the situation to slowdown in credit access owing to the law capping interest rates that has seen banks ration loans.
The lobby is fiercely opposed to the Banking (Amendment) Act 2016 that came into force on September 14 2016, introducing legal caps on rates.
Some analysts had mistakenly predicted that the coming into effect of the law would trigger increased uptake of mortgages.
“The rise in the house prices in quarter four should not be seen as a respite for the declining trend given that the increase was marginal and the demand side of the market remained fairly suppressed,” said KBA.
“The trend on suppressed growth of house prices mirrors that of credit growth to the private sector.”
Private sector credit grew by 2.4 per cent in the 12 months to December 2017, only slightly higher than the two per cent in October 2017.
The lobby noted that the mild increase could be linked to the “likelihood of the recovery” in demand and supply.
“The political environment experienced in quarter three of 2017 seems to be affecting both sides of the market though having eased off a little bit,” it said.
Some home buyers, it said adopted a wait-and-see attitude pending conclusion of the electioneering period.