Buyer demand drives double digit growth in Kenya’s housing market

House sales leapt 4.2 per cent in the first quarter of the year, while the number of new listings increased by14.6 per cent on a year earlier – marking the industry’s first double digit annual growth in five years.

Although more people are buying in 2016, increased supply of apartments has so far kept competition and rent prices in check, according to House Price Index report for Q1 by HassConsult.

HassConsult analysis revealed continuing demand for residential property since the start of the year despite the country’s economic uncertainty and market volatility – as most buyers showing preference for properties in Nairobi’s satellite towns.

“There has been increased demand for residential property since the year began, catalyzed by the poor performance of alternative asset classes such as stocks. Investors are also shying away from assets like fixed deposits in light of the perceived turmoil in the financial sector,” said Sakina Hassanali, Head of Research and Marketing at HassConsult.

Asking rents in Nairobi grew marginally by 1. 5 per cent during the period according to the report released Monday, attributed to the growth in suburbs that are characterized by detached and semi-detached houses such as Loresho and Lavington which grew by 3.4 per cent and 2.9 per cent respectively.

In contrast land prices in Nairobi’s 14 satellite suburbs rose by 1.1 per cent with Upperhill retaining its spot as the most expensive place to buy land with asking price of Sh511million.

The report comes on the backdrop of a another survey by Kenya Bankers’ Association which in its Q4 2015 house price index, showed that prices in Nairobi had risen five-fold since 2007, with average land costs in the city up 9per cent– even as the country is still faced by an acute hosing supply deficit.

A United Nations Human Settlements Programme’s for 2013-2015 report on the country indicates that Kenya has inadequate supply of affordable and decent housing especially at the under supplied low-income level.

It is estimated that out of the 200,000 housing units required yearly in urban areas, only 40,000 to 50,000 units are produced, while in rural areas, there is a need to improve the quality of more than 300,000 housing units every year.

Firms like Mascon Construction Systems, a Canadian based company plans to build 20,000 housing units for Kibera and Mathare residents between July this year and June 2018, at an estimated cost of Sh7.5 billion – in an effort to bridge the gap.

STATS

-Average value for land has gone from Sh30.3M in Dec 2007 to Sh173.2M in March 2016

-Average value for a 1-3bed property currently at Sh13.8million

-Highest house price increases for the period were experienced in Langata at 5.4 per cent, Karen at 5.2 per cent, Athi River at 4.9 per cent, Ruiru at 4.5 per cent and Muthaiga and Kitisuru at 4.4 per cent and 4.3 per cent respectively.