Covid-19: Land and House Prices Fall, Home Owners, Buyers Ask for Discounts

Covid-19: Land and House Prices Fall, Home Owners, Buyers Ask for Discounts

Nairobi Metropolitan, Karen Area PHOTO: KHUSOKO

Land and house prices in Kenya fell year on year in the second quarter for Nairobi suburbs and surrounding satellite towns due to the pandemic said HassConsult.

In the period ending June, house prices dropped 0.2 percent in quarter two compared to 3.6 percent the same period in 2019 attributed to downward pressure on asking rents.

“…but tenants, on the other hand, are increasingly asking for discounts (of between 25 and 30 percent) citing reduced incomes as the COVID-19 pandemic takes its toll,” reads part of the Hass Property price indices for the second quarter of 2020.

“COVID-19 has resulted in the closure of many industries across the economy and thereby reducing incomes of business owners and employees who are in turn exerting pressure on landlords to reduce rents,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult.

The report also noted that prices have remained relatively flat as developers and other sellers avoid generous discounts on properties or increasing prices as they wait to see how the economy will perform once it is fully reopened.

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Consequently, land prices declined by 0.74 percent on average in the review period in comparison to 0.6 percent increase last year for a similar period.

Land prices in the suburbs marginally decreased by 0.7 percent over the quarter while in the satellite town prices dropped 1.21 percent. 

According to Hassconsult, the mild softening despite the COVID-19 pandemic which continues to affect the wider economy is a reflection that investors still view land as a resilient asset class over the long term.

“…but we are yet to see ‘fire sales’ on land as this asset class is still seen as the most resilient over the long term,” said Sakina.

On an annual basis, Muthaiga recorded the highest gain among the suburbs at 4.5 percent while in towns Ruiru town recorded the highest increase in land prices at 5.16 percent.

Upperhill remained the most expensive land at Ksh525.7 million per acre while in the satellite towns an acre goes in Ruaka is now commanding a Ksh89.8 million asking price.