House prices in Kenya have remained stable in the third quarter of 2018 despite a reduction in the pace of growth, compared to the previous quarter.
According to the latest Kenya Bankers Association House Price Index (KBA-HPI), house prices went up by 1.35 percent, representing a 0.41 percent drop from the 1.76 percent increase reported in the second quarter.
The KBA-HPI attributes the stability to price changes remaining below one percent, partly due to market dynamics being tilted towards the influence of demand conditions. It, however, notes that while house prices were generally steady, the gradual decline in the rate of growth experienced over the first three quarters of 2018 signals a reversal of the uptick observed from the fourth quarter of 2017 to the first quarter of 2018.
The Index adds that house prices are likely to be influenced by anticipated changes in the supply side once projects under the government’s affordable housing initiative within the Big Four agenda take shape, with the risk appetite of both developers and financiers also expected to adjust in line with the market dynamics.
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“Despite the price increase, the situation in the market reflects subdued demand on the back of continued investments in the housing market which remained skewed towards the middle and high-income bracket, ‘’ said KBA Research and Policy Director Mr. Jared Osoro.
In addition, supply and demand changes saw homeowners preferences tilt towards bungalows (38%) apartments (35%) and maisonettes (27%), marking a reversal of the dominant position maintained by apartments in the past four quarters. Similarly, the configuration of homeowners’ preferences in the third quarter of 2018 was skewed both in terms of the type of houses and regions, with maisonettes and bungalows being concentrated in the high-income bracket. Apartments had an almost equal distribution in both the upper end and the lower and middle market ends.
Meanwhile, price drivers in the third quarter remained unchanged, signalling consistency in homeowners’ preferences. Unlike previous quarters, the size of the house as measured by the plinth area was insignificant.
However, other attributes relating to size such as the number of bathrooms, presence of a backyard and master ensuite continued to feature prominently in influencing house price movements – except that demand for houses available in the market was low.
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