Apartment prices go through the roof

When the price is too high, think twice. And so, too, should those buying apartments and flats in Nairobi.

According to latest findings, investors targeting these two classes of homes are being ripped off, with most of the properties overpriced.

In a market that has witnessed a boom over the last few years, more and more investors are falling for the higher asking prices for properties.

But their hope for quick returns, fuelled by the current high demand for houses, often turns into despair as the property’s values remain stagnant since they were bought at near-ceiling prices.

A property index released by Hass Property on Thursday, shows the pricing of some of the buildings in the capital city are exaggerated.

“Ambitions to secure profits on apartments bought as investments within the last two years are likely to remain thwarted for the time being, with no shortage or competition and some significant stocks of unsold properties,” said Ms Fatima Moledina, sales and letting manager at Hass.

The last four years have witnessed a surge in the construction of apartments and flats within residential areas, buoyed by a burgeoning middle-income class in search of homes.

The Hass Index, a quarterly survey on the country’s property market, further revealed that there was sluggish demand for property during the first quarter of the year.

Asking prices, however, rose sharply in the quarter by about 7.8 per cent driven largely by the apartment prices.

“It’s clear the market is solidly underpinned in holding its current price levels in both house sales and rentals,” said Ms Jenny Luesby, a consultant with the firm.

The firm also launched a letting index that will track trends in rental prices for middle and high-income residential areas.

This showed that there was stagnation in rental prices, with asking rents at the close of 2009 running at the same level as the beginning of 2007.

The index showed that the three months ending March 2010 saw a renewed push for higher rentals from landlords, particularly for apartments.

“Consumers should be warned that these asking prices are to some extent flying in the face of current levels of availability in the property market,” said Ms Moledina.