Business / Markets
Tuesday, 11 Oct 2016 04:57 EAT
Middle class Kenyans seeking to buy property should be wary of prices being quoted for houses in Thika, Syokimau and Mlolongo, according to a new study by the property consulting firm HassConsult.
The latest Hass Property Index for this quarter indicates a negative change in the property prices in the three regions over the last quarter even as prices for other satellite towns went up, implying a declining demand.
Kenyans are more sensitive to price above other variables, and the decline in those areas could mean buyers are reacting to perceived overpricing. The three areas, along with Westlands, Eastleigh and Donholm, which are in the suburbs segment, are the only ones to register price drop over the period.
Overall, Nairobi property prices increased by 1.2 percent in the third quarter of 2016, according to Sakina Hassanali, the HassConsult head of research and marketing, which was a slower increase than the 4 percent that was posted in the second quarter.
She said that this was attributed to the cooling down of semi- detached house prices which had been witnessing annual growth rates of over 20 percent earlier in the year down now to less than 10 percent.
She added that prices across Nairobi suburbs rose by an average of 1.2 percent in the third quarter outpacing satellite towns which recorded 0.9 percent increase over the same period. "Built up areas attract more property buyers as opposed to less developed areas that tend to attract buyers who are looking to cash in on land price appreciation,” said Ms Hassanali.
She also commented on the capping of the interest rates by the government. Despite the subdued growth there is positive sentiment that the capping of interest rates following the amendments to the Banking Act 2016 will spur interest in properties.
“The capping of interest rates will have a twin effect on the property market by making credit to developers more affordable which in turn will reduce the cost of units coming into the market. At the other end, reduced rates will give potential borrowers incentives to take up mortgages and other loan facilities,” said Ms Hassanali.
She added that the cap on interest will force banks to reduce the rate they offer on customer deposits. She said that lower returns on such customer deposits will result in the move of investment monies to higher yielding assets. She noted that real estate has been the most consistent asset in performance.
The writer is a contributing reporter for the Kenya Free Press