PROPERTY

Low earnings pushing buyers to cheaper houses - Knight Frank

Homebuyers expect property prices to continue to shrink

In Summary
  • At least 32 per cent of respondents, however, believe that their spending power remained the same and two per cent believe that it increased.
  • Although most buyers wish to change homes, the majority of them want to remain in the same area. 

National Housing Corporation’s flats in Nairobi West
PROPERTY MANAGEMENT: National Housing Corporation’s flats in Nairobi West
Image: /EZEKIEL AMINGA

Most people are expected to move into cheaper houses in the next 12 months after Covid-19 took a toll on their income.

Kinight Frank's latest Kenya Buyer Survey 2020 shows that more than a third of prospective homebuyers in the country are looking for low-cost houses with home offices, adopting to remote working 'new normal'. 

''At least 77 per cent of respondents are more likely to work from home,'' the survey shows.

Sixty-six per cent of respondents say that their budget has declined since the start of the pandemic, with 43 per cent of them indicating that their budget declined by over 10 per cent.

This is likely because many companies have had to resort to salary cuts, reduced hours, or redundancies.

At least 32 per cent of respondents, however, believe that their spending power remained the same and two per cent believe that it increased.

''Respondents who indicated that their budgets have increased were able to save more due to fewer opportunities to spend throughout the course of the pandemic or the tax allowances introduced over the period,'' the survey shows. 

Although most buyers wish to change homes, the majority of them want to remain in the same area. 

People choose where they live based on factors that include housing prices, disposable incomes, proximity to work and access to schools, among others.

''The desire to remain in the same location suggests that for these buyers the reasons that drew them to the area will continue to hold true over the next 12 months,'' the report read in part. 

Homebuyers expect property prices to continue to shrink even as preliminary data for the second half of the year indicates some sale price stability as the economy continues to open.

''The increased demand for liquidity has meant that sellers are more inclined to discount their prices and discounted offers of up to 15 per cent of the asking prices have already been witnessed,'' Knight Frank shows. 

The survey's first-half market update found that prime residential sale prices in Nairobi decreased by 2.9 per cent over the first half of the year, compared to a 1.8 per cent decline over the same period in 2019; predicting that the decline would continue until the end of the year, albeit at a slower rate.

According to the survey, buyers may need to act quickly to capitalize on the softer prices, although it is anticipated that this trend will continue into 2021.

''Over the course of the pandemic, we have seen reduced sales pricing and discounted rents, a trend we anticipate will continue into next year,'' Ben Woodhams, MD Knight Frank said.

In terms of buying motives, acquiring a holiday home ranked highest as the main reason for purchasing a new home in the future.

This suggests that as the pandemic has forced many to stay indoors, through government and health directives, it has stimulated buyers’ interest in homes that they can use as an escape or refuge.

More than 50 percent of respondents say that they are more likely to buy a detached family home than they were before Covid-19.

In terms of their budget, 66 per cent of respondents said that their budget had declined since the start of the pandemic.