Realtors to close worst year in half a decade

Harsh economic times have pushed down house prices by 6.4 percent in the last three quarters with current year set to be the worst in half a decade.

Kenya Bankers Association (KBA) House Price Index showed 2019 was the worst for the real estate sector in the past five years during which house prices dropped consistently, with the second quarter reporting a 1.72 percent drop while the third quarter saw a further 2.71 percent slump.

“They observed sustained decline in house prices is an indication of an emerging trend whereby the prices have transitioned from a continuous positive trend seen since the last quarter of 2014. If the price softening is sustained into the last quarter of the year, it will be a pointer to a market correction that comes after a long streak of house price increases,” it said.

More Kenyans, it said, now settle for apartments (84.75 percent) to be closer to their workstations as stand-alone bungalows and maisonettes were prohibitively priced.

The trend has seen apartment developers invest in value-additions such as elevators, rooftop pools, gyms and spas as well as kindergarten units, shops and barber-cum-salon shops.

“The apartments accounted for 84.75 percent, maisonettes (9.68 percent) while bungalows stood at 5.57 percent. The dominance of apartments illustrates a case of affordability for a financially-constrained household,” it observed.

While the real-estate sector experienced a 25 percent increase in house sales in the third quarter, the report attributes the growth to supply-spillovers and not new properties entering the market.

“The supply market has been characterised by a slump in approvals of housing plans, a decline in cement production and consumption as well as a muted disbursement of loans,” it said.

Observers say the repeal of rate cap law might usher in a last-minute rush purchases of low-priced housing units with the report looking at a possible ‘market’ correction of prices.

With the government and its development partners raising capital to facilitate low-cost mortgages and implementation of the 500,000 affordable housing units on 7,000 acres of land in all counties, the real estate sector could finally experience heightened activity mainly from the middle income segment for long unserved by realtors who have concentrated activities in provision of houses for the high-end market.