House prices have remained in the decline for the five consecutive quarters according to the Kenya Bankers Association House Price Index (KBA-HPI).
The price of houses continued to decline in the first quarter of 2020 following the increasing inability of potential buyers to afford homes currently on offer in the market, according to the latest edition of KBA-HPI.
According to the Index, house prices dropped by 0.54 percent in the first quarter of 2020, a lesser decline than the 0.61 percent drop reported in the fourth quarter of 2019.
“While the market remained largely depressed, the marginal easing was supported by the supply-demand interaction with a leaning towards more demand in a relative context,’’ the KBA-HPI indicates, adding that demand shifts in the quarter were based on concluded sales, which rose by 13.95 percent.
The sale numbers show that bungalows saw a 33 percent increase in demand while the demand for apartments and maisonettes went down by 95.9 percent and 57.1 percent respectively during the quarter.
Unlike previous quarters where apartments dominated house demand, townhouses were the most preferred in quarter one of 2020 at 45 percent followed by apartments ( 33 percent) and maisonettes (12 percent).
The trend, according to the Index, reflects buyers’ adjustments with affordability being a key concern in the housing market.
“The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterized by a sign of normalization of house prices as the market comes into balance after a prolonged period of sustained price growth,” said KBA Research and Policy Director Mr. Jared Osoro.
Key drivers of prices in the period included geographical location and specific building features. For instance, homeowners sought a larger plinth area, more bedrooms, and bathrooms, which attracted higher prices.
While the presence of a back-up generator and other amenities attracted higher prices, homebuyers preferred low-density buildings.
The housing market started the year on a shaky footing based on a depressed economic outlook for 2020, and sentiment-led deterioration in house price growth both acting as a brake on a scope for house price growth going forward.
KBA-HPI stood at 117.44 in quarter one of 2020 compared to 118.04 recorded in the previous quarter based on the moving base index. The index uses data from major residential markets in Nairobi and selected locations in major towns across the country.
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