Money Markets
KBA chief executive Habil Olaka (left) during the release of KBA Housing
Price Index in Nairobi on Jan 27, 2016, and an apartment block in the
city’s Hurlingham area. PHOTOS | DIANA NGILA and FILE
In Summary
House prices have only increased marginally in the
last three quarters thanks to new dominance by apartments, a situation
the bankers’ survey says is an indication of stability in the property
market.
Kenya Bankers Association-House Price Index (KBA-HPI), which
measures house values across major suburbs, shows prices increased by
under two per cent in the last three quarters of 2015.
The latest index indicates average prices increased
by 1.14 per cent in the last quarter of 2015, slightly down from 1.25
per cent registered in the third quarter but higher than 0.2 per cent
registered in the second quarter last year.
KBA director of research and policy Jared Osoro
said the marginal increase is driven in part by developers putting up
more apartments where standalone houses once stood as they target middle
class buyers.
“What is coming out clearway is that there are more apartments that are coming up in the market,” said Mr Osoro.
The KBA-HPI shows that 93 per cent of all the
housing units that came to the market over the last quarter were
apartments, six per cent were maisonettes while bungalows accounted for
the remaining one per cent.
The preference for apartments by home owners is due to their affordability relative to bungalows and maisonettes.
Developers on their part are focusing on apartments
since they offer the highest return on investment per acre than
bungalows and maisonettes.
“In addition, from the real-estate developers point
of view apartments could be yielding high returns given that a number
of units can be put up in a small piece of land and the high cost of
land as opposed to maisonettes and bungalows which have to be
standalone,” said the KBA-HPI.
The index shows prices mostly rose for houses that have enough space, scenic views and are located close to social amenities.
Developers say apartments whose prices are not rising at all are mainly those put up a decade ago.
“Those units are barely moving,” said Anthony Mugo, the chief executive of real estate firm Falcon Development.
A stable property market is good for investors such
as home owners, financiers and developers since it reduces the risk for
all parties, Mr Osoro said.
The findings of the KBA-HPI confirm recent data
from property firm Hass Consult, which released its flagship Hass
Property Index Monday.
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