A housing estate in Kenya. PHOTO | FILE
Summary
- Politically charged environment and interest rate caps hit demand for homes, KBA says.
- Housing prices in the country barely rose in the three month to end of September, adding only 0.42 per cent.
- The index showed that house prices had been on a steady decline for over a year, coming off a growth of 2.20 per cent in the third quarter of 2016.
Housing prices in Kenya registered sluggish growth in the third
quarter of this year as the real estate market reeled from a politically
charged environment that kept away investors and the adverse effects of
interest rate caps.
This is according to data from the
Kenya Bankers Association (KBA) released Friday which showed that
growth in the price of homes hit the lowest rate in three years.
The
KBA Housing Price Index, which tracks the sector's dynamics and price
movements every quarter since 2015, showed that prices in the country
barely rose in the three months to end of September, going up by only
0.42 per cent.
Jared Osoro, KBA’s director of research
and policy, said the fall in housing prices mirrored the decline in
credit growth in the country since an interest rates capping law was
brought into place in September last year.
A
protracted presidential campaign period further exacerbated the slowdown
as investors took a back-seat due to uncertainty generated by a
political impasse.
“Given the current political
uncertainty in Kenya and the slow down we’ve seen in private sector
credit, in part due to the interest rate cap it is perhaps not
surprising that we have hit the biggest slowdown since 2015,” KBA’s CEO
Dr Habil Olaka said Friday.
Steady decline
The index
showed that house prices had been on a steady decline for over a year,
coming off a growth of 2.20 per cent in the third quarter of 2016.
High
demand for apartments, which accounted for 82.66 per cent of the total
number of units sold in the third quarter of 2017, saw their prices
outpace those of bungalows and maisonettes, the index showed.
“With
the generally depressed demand in the economy and the slowdown in
credit expansion, households relying on the credit market towards home
acquisition have been adversely affected,” Osoro said.
“This has consequently influenced the house prices trend,” he added.
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