19th Feb, 2016
NAIROBI, KENYA: Many Kenyans are opting for apartments compared to maisonettes and bungalows in a new Housing Price Index released by Kenya Bankers Association.
The growing taste for apartments according to the survey which represents trends in the fourth quarter of 2015 is due to skyrocketing prices of land and their affordability on the rental side.
According to Jared Osoro, Kenya Bankers Association Director of Research and Policy, apartments accounted for 92.7 percent of the total number of houses offered in the market with maisonettes coming second at 5.80 percent and bungalows third at 1.41 percent.
He said this justifies the increased appetite and relative affordability for apartments by an apparently growing middle class.
“From the real estate developers’ point of view apartments could be yielding high returns given that a number of units can be put up in a small piece of land and the high cost of land as opposed to maisonettes and bungalows which have to be stand alone,” he said.
The survey conducted in areas classified as region one, region two and region three depicts a shift from tradition where areas previously known for maisonnettes and bungalows now embrace apartments.
Region one includes Athi River, Mlolongo, Mavoko, South C, Kitengela and Ruai among others. Region two includes South B, Komarock, Imara Daima, Ngong Road Mbagathi road and Langata among others. Region three includes Kileleshwa, Springway, Adam Arcade, Mountainview and Nyali.
The sub regional indices indicate that apartment prices in all the three regions are clearly on a gentle rising trend.
The Kenya Bankers Association launched the survey in 2015 to better guide policy makers and investors on the trends in the housing sector.
According to the survey which covered fourth quarter of 2015, home prices rose marginally between September and December, suggesting that an end to the sharp hikes of the last decade could be behind us.
Kenya Bankers’ Index shows that property prices around the country grew by 1.14 per cent – slower than the 2.75 per cent reported in Quarter 1 and 1.25 per cent in Quarter 3.
“What we are seeing is stabilization in the homes market,” said Habil Olaka, the chief executive officer at the bankers’ lobby.
The index only covers actual sales that may have been concluded through the involvement of the banks, he added.
A spike in interest rates last year is thought to have slowed homes sales, dampening demand to depress prices.
But the slowdown is only part of a wider stabilization of the fairly small market whose prices were dictated by a severe shortage. That shortage and the resultant abnormal profits became a huge incentive for developers; especially in the top end of the market that analysts concur has now been oversupplied.
