House prices are on the rise after seven quarters of depressed growth, a new survey by the Kenya Bankers Association(KBA) reveals.
According to the KBA – House Price Index, prices rose by 0.22 per cent in quarter four of 2020, from a 0.08 per cent contraction in the previous quarter.
Although house prices have been on the rise, it has been gradual.
“The uptick in the House Price Index signals stabilising market prices, which largely reflect an outcome of the demand and supply dynamics in the market,” the index says.
On the supply side, housing remains largely fixed, with adjustment to meet demand being gradual rather than instantaneous.
With depressed credit to the construction and real estate sector, an under-supply of new units has triggered the rise with most sales in the period being on the already completed units from the previous periods.
The rise in prices has also been compounded by homeowners’ preferences for newer buildings.
KBA Research and Policy Director, Samuel Tiriongo, indicated that while house prices rose faster with an increase in the area, number of bedrooms, number of floors, they remained relatively lower for older units.
“By house type, our analysis also reveals that prices for apartments rose faster than those of bungalows and townhouses, but were slower than those of maisonettes, reflecting emerging preferences for apartments over other house types due to their relatively lower cost of development per unit,” he said.
During the quarter, the number of transactions increased five-fold from 57 in quarter three to 314 units and two-fold compared to a similar period in 2019.
Apartments continued to dominate, accounting for 71 per cent of the total number of units traded, while maisonettes and bungalows accounted for 23 per cent and 4 per cent, respectively.
The KBA Housing Price Index (KBA-HPI) provides a guide to policymakers and investors on the trends in the housing sector.