PROPERTY MARKET

House prices further decline in third quarter

The prices declined by 2.28 per cent in three months to September compared to the 1.72 per cent decline reported in the previous quarter

In Summary

•The supply-side of the market has been characterized by a slump in approvals of housing plans, a decline in cement production and consumption, with muted growth in advances to building and construction sector compounding the tapering off momentum.

•A Sale price index Q3 report by HassConsult stated the tough economic times continue to weigh the overall rental and property sales markets as customers especially lower-middle-income households opt for long journeys in search for cheaper rent.

House prices maintained a downward trend in the three months to September, due to low demand.

Low uptake has forced developers to cut on new units. They are instead selling the existing houses for which they have equally been forced to slash prices to attract buyers.

According to Kenya Bankers Association research and policy director Jared Osoro, also in play is the tight credit conditions that have seen a decline in advances to households.

 

“This has adversely influenced their ability to access appropriate resources toward homeownership. Households’ disposable incomes remain constrained,’’ Osoro said.

As a result, house prices declined by 2.28 per cent compared to the 1.72 per cent decline reported in the previous quarter in the latest KBA  House Price Index for the third quarter of the year.

This follows similar quarters where distressed sellers moved to discount property prices into order to attract buyers.

A sale price index Q3 report by HassConsult stated the tough economic times continue to weigh the overall rental and property sales markets as customers especially lower-middle-income households opt for long journeys in search for cheaper rent.

 KBA' index also notes that the sustained decline is an indication of an emerging trend where 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 and going forward, it will be a pointer to a market correction that comes after a long streak of house price increases,’’ the index stated.

On the supply-side, there was a 25 per cent increase in housing units sold during the quarter, reflecting the scenario of supply-spill overs from the second quarter rather than new properties entering the market.

The supply-side of the market has been characterized by a slump in approvals of housing plans, a decline in cement production and consumption, with muted growth in advances to building and construction sector compounding the tapering off momentum.

The Index indicates that house prices in the third quarter were sensitive to the size of the house, location and amenities in a trend underpinned by a supply-demand imbalance.

Apartments continued to dominate buyer preferences in the housing market, suggesting a predominance of the middle-income segment of the population.

 
 

However, there were a downside price movements, with apartments in areas such as Thindigua (Kiambu Road), Kiambu, South B and C, Komarock, Rongai, Waiyaki Way and Langata registered the highest decline

This compared to apartments in Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi, Kahawa Wendani, Thika, Mtwapa, Kitengela, Eldoret, Ruiru, Kilifi along Thika road. However, bungalows in these regions recorded price appreciations.