- House Prices Decelerated By 0.54 Percent During Quarter 1 Of 2020 Compared To 0.61 Percent In Previous Quarter.
- Townhouses Dominated The Market At 45 Percent, Edging Out Apartments.
Nairobi 26th May 2020 – The price of houses continued to decline in the first quarter of 2020 in a trend compounded by constrained ability of potential buyers to afford homes currently on offer in the market, according to the Kenya Bankers Association House Price Index (KBA-HPI).
According to the Index, house prices decelerated by 0.54 percent in the reviewed period, marginally reversing the decline by 0.07 percent from the 0.61 percent negative growth rate reported in the fourth quarter of 2019. By the KBA-HPI measure, house prices have remained in the deceleration path for the fifth consecutive quarter.
“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 point to a market where bungalows accounted for a 33 percent demand increase while the demand for bungalows and maisonettes went down by 95.9 percent and 57.1 percent respectively during the quarter. 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,” noted KBA Research and Policy Director Mr. Jared Osoro.
Other key drivers of prices in the period included geographical location, with houses in Region 3 attracting higher prices as compared to region 2 and Region 1. Further, 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, home buyers preferred low-density buildings. 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).
Note to Editors:
To better guide policy makers 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 recognised 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 by getting the ratio the estimated current quarter price from the hedonic method multiplied the weights of the preceding quarter to the price of the preceding quarter multiplied by the respective weights of that quarter. The weights of the quantitative variables are obtained by getting their respective mean values. For the dummy variables however, their weights are computed as 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.