Property prices in Kenya fell marginally for the fourth consecutive quarters to the end of 2019 according to Kenya Bankers Association House Price Index (KBA-HPI).
House prices decreased by 0.61 percent compared to the 2.28 percent decline that was reported in the previous quarter attributed to an overall slowdown in the performance of the economy, which in turn tightened disposable income growth among potential home buyers.
In addition, the findings show that rising distressed properties overhang continues to have a bearing on house prices, shaping market expectations and causing dealers to align by reducing their asking prices.
“This negative feedback loop has clouded the house market outlook and led to price rediscovery in favor of a downward correction,’’ said KBA Director of Research and Policy on Financial Markets Mr. Jared Osoro, observing a sustained five-year market correction albeit with modest price increases.
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The outlined evolution of house prices evidently point to a market correction that follows sustained but modest price increases that had been seen over the past 5 years.
According to the report released on Monday, the sustained decline of house prices coincides with the rising distressed properties overhang. This has further shaped market expectations and sentiments in a manner that buyers are unwilling or unable to pay the current asking prices, and thus vendors are dropping their asking prices.
Apartments retained dominance but recorded a decline in market share
In the report, While apartments retained their market dominance, their market share came down from 85 in the previous quarter to 74 percent. Preference for maisonettes rose from 10 percent in the past quarter to 17 percent, with bungalows registering a preference rate of 9 percent.
Overall, homes with more bedrooms, bathrooms and plinth areas attracted higher prices.