House prices increased marginally by 1.49 per cent in the last three months of 2018 to indicate a continuing turnaround effect on investment and returns for investors.
Housing price index stood at 126.99 in the last quarter compared to 125.10 of the third quarter of 2018.
This means that an apartment going for Sh800,000 in September 2018 retailed at Sh811,920 in December.
According to the Kenya Bankers Association House Price Index, the sector is experiencing a slow growth with investments skewed towards the middle and high-income bracket.
“Homeowners' preferences have shifted to new buildings, with buyers interested in large floorspace by opting for higher-density developments,” KBA stated.
The price increase was mainly influenced by location.
Buyers preferred upper market (Kileleshwa, Kilimani, Lavington, Westlands) and middle-income segments (Kiambu Road, Kiambu, South B, South C, Kabete, Komarock, Imara Daima) like compared to lower income segments (Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi, Kahawa Wendani, Thika) of the housing market.
During the quarter, a reversal of preferences saw apartments account for 76.2 per cent of the total number of units sold followed by bungalows and maisonettes at 12.1 and 11.6 per cent respectively.
“The rise in demand for apartments should be seen in light of its affordability to home buyers, given the lower cost of construction per unit on the developers' side,” KBA research and policy director Jared Osoro said.
The index also notes that the slight increase indicated general house-price stability, attributed to the supply and demand in the market despite a constrained experienced from
high
cost of funds.
"On the supply side, the market appears to be tilting towards few additional units coming into the market due to constrained access to credit by developers. However, the limited credit is a binding constraint on the demand side," KBA showed.
The trend also reverses a course experienced in preceding three quarters of the year.
In the period between July and September 2018, house prices increased by 1.35 per cent, representing a 0.41 per cent decline from the 1.76 per cent rise during April to June 2018 period.
The figure for the second quarter of the year represented a marginal decline from the previous quarter’s 2.08 per cent.
The real estate is expected to kick off this year following the affordable housing initiative as part of the Big 4 Agenda focused on delivering 500,000 units by end of 2022.
The price will range at Sh600,000 to Sh3 million, to address the large housing deficit of two million units.
The agenda has so far gained momentum with the launching of projects such as the Pangani Estate in Nairobi.