Homeowners Seek Affordable Units as Housing Prices Sustain Unsteady Decline kbaadmin May 14, 2024

Homeowners Seek Affordable Units as Housing Prices Sustain Unsteady Decline

  • House Prices in the low-market segment grew by 62.3% in Q4 2023 compared to 48 percent in Q3.
  • Maisonnetes demand grew notably to 29.91 percent from 15.2 percent in Q3 of 2023.

 Nairobi, 14th May 2024Most home buyers sought lower-segment houses in the year 2023 even as real estate developers grappled with a sustained overall  wobbly decline in housing units’ prices for most part of the year.

According to the latest Kenya Bankers Association (KBA) Housing Price Index (KBA-HPI), there was a marked demand uptick within the low-market segment in the last quarter of the year 2023, accounting for 62.3 percent compared to 48 percent recorded in the previous quarter.

The trend followed an overall sustained negative pace of house prices growth in the first three quarters of the year despite recording a modest 1.53 percent decline in the last quarter, driven by a slight strenghtening of demand towards the end of the year.

The Index, which tracks housing price movements from the last quarter of the year 2021, shows a persistent and uneven negative-territory home prices growth trajectory, in a trend that the KBA-HPI associates with corresponding fluctuating activity in the construction sector.

“A fluctuating trend was evident in the construction sector; starting with a slight increase in the first quarter( 3.06 percent), followed by a decrease in the second quarter (2.55 percent) and a subsequent rise in the third quarter of 2023 (3.8 percent),” reads the Index, whose base evaluation rate was set in the year 2013.

Further analysis of completed transactions shows a significant drop, particularly in the mid-market segments to account for 21 percent from 37 percent in quarter three of the year. In addition, there was a slight activity increase in the high-market section, to account for 17 percent in quarter four from 15.2 percent in the third quarter.

During the period under review, preference for Apartments remained dominant despite recording a 14 percent quarter-on-quarter decline between the last two quarters of the year. The demand for Bungalows remained steady, accounting for 30 percent of the market share, with preference for Maisonnetes growing notably to 29.91 percent from 15.2 percent in the third quarter.

Access Full Report Here: Housing Market Prices Decelerate in Q4-2023

Note to Editors:

The KBA Housing Price Index (KBA-HPI) provides a guide to policymakers and investors on the trends in the housing sector. The banking industry’s umbrella body, the KBA, launched the KBA-HPI in February 2015. The Index has quickly been recognized as a credible analytical tool that is useful for tracking housing sector dynamics and price movements. The KBA-HPI follows the Laspeyers Index method where the Index is computed from the ratio of the estimated current quarter price to the price of the preceding quarter – weighted by their respective mean values.  For the dummy (categorical) variables, however, their weights reflect the proportions of the number of houses possessing a certain attribute to the total number of houses.

The KBA-HPI regions are based on clustered price ranges across several counties as follows:

Region 1: Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi, Kahawa Wendani, Thika, Mtwapa, Utange, Kitengela, Kiembeni, Nyeri, Likoni, Eldoret, Ruiru, Kilifi,Thika road (Kasarani, Roysambu, Ruaraka), Meru, Bungoma.

Region 2: Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai, Waiyaki Way (Uthiru, Regen, Kinoo, Kikuyu), Mbagathi road, Ngong Road, Langata

Region 3: Kileleshwa, Kilimani, Lavington, Westlands, Spring Valley, Riverside, Milimani (Kisumu), Milimani (Nakuru), Runda, Karen, Garden Estate, Parklands, Ridgeways, Muthaiga, Loresho, Kitisuru, Adams Arcade, Nyali, Mountain View, Nyari.


 Dr. Samwel Tiriongo
Director, Research and Policy
Kenya Bankers Association
Email: stiringo@kba.co.ke
Mobile: 0722949185