Connect with us

Business News

Cheap homes to shakeup housing market



The fruition of the government backed cheap homes initiative is expected to create a radical shift in the housing market, this as the sector on boards a whole new demographic.

Government sanctioned interventions including most recently,the operation of the Kenya Mortgage Refinancing Company (KMRC)- the key to the unlocking of long-term liquidity for the sector are expected to offer impetus, reigning in middle-lower and lower income households into home ownership.

“The investments into the affordable housing initiative is likely to shape the housing market as it is bringing a supply dimension to a segment which had been missing from the market and hence the market is likely to take a different turn.

“Though not immediate, we expect to see a gradual implication going forward as the structure takes shape,” said Jared Osoro, the Kenya Bankers Association Head of Research.

He was speaking during the release of KBA’s quarterly Housing Price Index on Friday.

The index which tracks the prices of homes for sale continued to exhibit its consistent stability ending the first three months of the year with a 0.87 average change to housing prices since the induction of the indicator in 2013.

House prices during the quarter were however on the retreat deeping by 2.78 percent, the first decline since the third quarter of 2014 in a performance attributable to the full circle effects of credit constrains on both the supply and demand side.

The credit constrains were largely defined as the impact of prevailing economic conditions represented mainly in the squeezing of house-hold budgets, an effective interruptor to demand.

Apartment blocks continued to remain the most influential type of housing taking up a share of 62.6 percent of total units sold during the quarter.

With the coming to be of affordable homes, Jared Osoro expects the above fundamentals to witness a tilt as some consumers may opt for the cheaper units.

“If you have been investing in a house simply to get a tenant for a return rather than for occupatiom, that market is likely to take a different turn as potentially, some people who would have otherwise occupied those houses will now be able to own their own homes,” he said.

Osoro however does expect the housing demographics to hold even as the a lumpsome 500,000 units over the next three years potentially enters the market.

KMRC effectively eases credit constrain concerns on the demand side of the market by availing mortgages to potential home owners at concenssional and longer repayment terms.

While renewed demand is traditionally followed by supply, the housing market makes for the law’s exception characterized to a large extent by the little restraining fluctuations in real estate prices.

Further, any shift by home developers into the affordable housing purview is expected to be backed heavily by government interventions to include the subsidized pricing of construction resources and land acquisition.

While the government came up with a number of policies and programmes geared towards improving infrastructure to spur economic growth in 2018, the construction sector witnessed a slowdown in growth to 6.3 percent from 8.5 percent in 2017.

Growth in loans and advances to the sector similarly remained subdued rising marginally by 1.8 percent to Ksh114 billion.

Units under construction across the year meanwhile stood at 2,028 with a valuation estimated at Ksh.4.32 billion.

For Citizen TV updates
Join @citizentvke Telegram channel

Video Of The Day: | DEFILED IN CHURCH | Girls defiled by men of the cloth

Source link