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House prices fall as auctions loom

by biasharadigest
Market News

House prices fall as auctions loom

Jared Osoro
Kenya Bankers Association director of research and policy Jared Osoro during a past briefing in Nairobi. PHOTO | SALATON NJAU  

A rise in non performing loans forced developers to discount properties on the market leading to drop in prices in the past year, a report by Kenya Bankers Association (KBA) reveals.

KBA’s Housing Price Index says harsh economic times saw buyers decline to pay the current prices, which pushed developers slash their costs in a bid to avoid facing the auctioneer’s hammer.

“The findings show that a rising distressed properties overhang continues to have a bearing on house prices, shaping market expectations and causing dealers to align by reducing their asking prices,” said KBA.

KBA added that Kenyans still preferred to buy apartments located in Nairobi satellite towns, and other major urban centres such as Nakuru, Nyeri, Likoni, Eldoret, Kilifi, Meru and Bungoma, mainly due to friendlier prices compared to areas closer to Nairobi city centre.

Apartments commanded a 74 per cent lead in share of sales, down from 2018’s 85 per cent, solely blamed on a change of preference where buyers preferred apartments with fewer occupants as opposed to the high density high-rise properties deemed to lack privacy and a tranquil atmosphere.

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The increased investments in construction of roads linking Nairobi to satellite towns have also pushed buyers to more rural destinations, adversely affecting apartments in suburbs such as Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock and Imara Daima.

The fourth quarter index registered a 0.61 per cent decline compared to the third quarter’s 2.28 per cent drop in house prices, an indication that repeal of the interest rate capping law last November could have eased access to credit.

KBA director of research and policy Jared Osoro said maisonettes reported a 17 per cent rise from 10 per cent realised in the past quarter mostly within Nairobi’s suburbs and major urban centres.

Last week, realtor HassConsult also released its index indicating a price correction largely riding on a rise in distressed properties where most buyers preferred to buy properties outside Nairobi.

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