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EAC: Surge in property prices take center stage on Day 1 of Real Estate summit
This year’s East Africa’s real estate forum, the East Africa Property Investment (EAPI) Summit, which kicked off Wednesday in Nairobi and will run through to Thursday.
The two-day event themed ‘Unlocking East Africa’s Potential’ attracted over 20 leading real estate development and investment companies in Africa and from all country members of the East African Community.
The forum comes at a time when players in the Kenya’s residential property market are still drawn to debate on whether or not there’s a housing bubble in the industry, amidst unrelenting soaring home prices in the country’s biggest cities.
The prices of dwellings have risen sharply over the last decade amid high demand from both long-term investors and speculators, and between 2007 and 2015, the average price of a one to three bed room apartment has escalated from Sh 5.2million to Sh 13.4million.
Available figures indicate that there’s housing deficit in the country with only 50,000 housing units being put up yearly against 200,000 required annually in all income classes to meet the demand.
Recent survey by Cytonn Investment indicated that factors such as low interest rates averaging at 5 per cent, an increase in income levels to allow for increased speculation in house prices and a constraint in the land supply in the market either through increased development or zoning regulations, are the only influences that could trigger housing bubble.
A real estate bubble is a periodic phenomenon characterized by rapid increase in value and hence prices of property to levels that are unaffordable by the population, which results into lower demand hence prices declining tremendously.