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By Steve Umidha
Housing market as a key driver to the Kenyan economy appears to be showing early signs of recovery in the post lockdown period.
Despite the sector’s challenges brought by the coronavirus pandemic, the latest industry tracker by Kenya Bankers Association’s House Price Index (KBA-HPI), suggests market conditions are improving and Kenyans are still keen to rent open apartments with a good number planning home purchases.
The new KBA-HPI figures released Monday, shows that house prices in the second quarter of 2020 (April –June) thinned by 0.20 percent compared to 0.51 percent fall seen in the first quarter of the year – representing a fringe improvement.
“With demand remaining depressed, the concluded sales during the second quarter of the year represented a nearly 40 percent drop from the previous quarter,” the KBA-HPI report notes, adding that while demand during the quarter was subdued due to a weak economy, the price movements were not far-reaching, partly due to the characteristic tendency of house prices to resist reductions.
Property market was on a free flowing decline in 2019 even before the pandemic, due to weak economic activities and tight credit market owing to the effects of the law capping interest rate – which was rescinded in November last year – and whose effects discouraged investments in the housing market.
KBA –HP Index attributes the above reasons to the limited supply of housing units which lead to the low demand.
“While showing positive growth during the first quarter of 2020, the broader construction and real estate sector manifested the weakness in the broader economy with its expansion of 5.3 percent being 0.38 percentage points lower than a similar period last year,” said KBA Chief executive Habil Olaka.
Homebuyers’ preferences were characterized by a shift back to apartments as demand for townhouses appeared to fizzle out.
During that period, demand for apartments more than doubled accounting for 75.6 percent compared to 33 percent of the concluded sales in the previous quarter – with bungalows and Maisonettes jointly accounting for 24.4 percent of the concluded sales.
Coronavirus pandemic had created cataclysmic headwinds and jitters for most players in the property market as early as March when the first case of the virus was reported in the country.
Most developers had hinted at lock down as a hindrance for many players in the sector which was abridged to number of workers on sites and disrupted supply chains including sporadic access to construction material shops that impacted on project delivery timelines.
“We expect most activities to gradually return to optimum levels to correct longer development periods, a situation we had been pushed into by the COVID-19 pandemic,” said George Mburu, a director at Mizizi Africa Homes.