Kenya Bankers Association(KBA) has released its first quarter house price index showing that house prices increased by 2.08 percent during the first quarter of the year. This is a relief to the market which has been gloomy for nearly one and a half years. The increase, reflected a reversal in the rate of price increases since Q3 of 2016 when the increase was 2.2 percent.
The positive change, shows that the housing market has accumulated significant optimism. KBA however warns in the report that the numbers cannot be used top form an objective view of the long-term market recovery in 2018 as the surge for the first quarter of the year is still as isolated event. Result in subsequent quarters should therefore be taken into consideration.
The caution is called for based on the view that the performance of Q1 could have been based on completion of transactions from Q4 of 2017, which were held back due to the prevailing anxiety at the time. However, with political conditions fully repaired and business now in full flow, the analysts say the market is poised for recovery as investors and home buyers loosen up their guards as indicated by Q1 performance.
The index, shows that there was a 190.84 percent rise in the number of units offered for sale in Q1 a majority of which was a spill over from the previous quarter. Supply challenges however, still persist with due to the tight financing environment for developers.
Since quarter one of 2013 to the end of the just concluded quarter, the index estimates that house prices have risen by 23.83 percent. However, house price drivers generally remained unchanged with house size as captured by plinth area, number of bedrooms, number of bathrooms, presence of a backyard, master en suite and gym area being the core drivers of house prices during the quarter.
Other attributes such as the type of the house, age, location, number of floors especially for apartments and presence of parking lot also appear to have significantly influenced house prices during the first quarter of 2018.
There was also a change in market the performance of housing market categories as maisonettes led the market at 56.17 percent of the total units offered for sale followed by bungalows at 39.11 percent whereas apartments came third at 4.72.
This is in contrast to the previous quarter where apartments took the lead, the explanation being that large housing projects in the quarter consisted of mostly maisonettes and bungalows specifically in areas classified under region two
In deviation to the previous periods where market activity was concentrated in the lower-income market segments, market activity in Q! 2018 was more concentrated in the middle-income market segment.
The housing price index aggregates data from Nairobi and other major towns in the country into three sub regions to analyse the housing market.