House prices and rents in Nairobi have stagnated over the past three months, shows a survey released on Wednesday.
Whereas prices increased by 0.5 per cent, rents went down by 0.2 per cent. According to experts, the survey shows Kenya’s housing market is stable and unlikely to suffer any marked downturn in prices in the future.
The Hass Property Index, a quarterly study of housing, indicates that the average price of a house in the upmarket parts of the city increased from Sh20.4 million to Sh20.5 million in the period.
Rent, also in upmarket suburbs, averaged Sh165,400 a month, down from Sh165,700 for the first three months of the year. While the survey is reflective of mostly up market neighbourhoods, Hass Consultants say the trend also affects middle class areas.
The data used in the index is drawn from all advertised rents across the city and figures on the actual sales the firm has made.
“The selling prices — the price at which properties were actually sold — showed a third consecutive marginal gain up 0.5 per cent following a 1.8 per cent gain in the first quarter and a 0.4 per cent gain in the final quarter of 2009,” said Ms Jenny Luesby, the lead consultant of the index.
The consultants attributed the market’s stability to the current economic growth, which has resulted in an increase in buying activities and pockets of competition for properties.
However, the index revealed that rents in Nairobi remained flat in the three-month period of April to June covered by the research. This was a replica of the first quarter of the year that did not witness any change in pricing.
“In fact, average new rents fell very marginally by 0.2 per cent between the first and second quarter,” Ms Luesby said. Currently, the rental market in Kenya is facing an upward pressure as a result of a rising middle class.
The demand is believed to be higher than the supply of housing units. Statistics from the government and private sector players indicate that the annual demand for housing in Kenya stands at 150,000 units.
This demand far outstrips the supply, which is estimated at about 35,000 units a year. The index shows that investing in Kenya’s housing industry has better returns than in the United States and the United Kingdom.
The phenomenon is highly linked to the growth stage that the local market is at and the debt position of homeowners. ‘‘The market is still in its youth with decades of growth ahead whereas the British and American markets are far more mature,” the index indicated.