Buyers give real estate a wide berth

Wednesday, May 27th, 2020 00:00 |
Housing project. Photo/Courtesy

Lewis Njoka @LewisNjoka

The built environment continued to dissipate in the first quarter of 2020 as the cost of houses continued to dip as buyers shied away from the market.

According to the Kenya Bankers Association House Price Index (KBA-HPI), the prices of houses decelerated by 0.54 per cent in the first quarter of the year, meaning that prices remained in the deceleration path for the fifth consecutive quarter.

Growth rate

This review, which was done on the back of coronavirus-pandemic shocks, shows the dip was a marginal 0.07 per cent revision from the 0.61 per cent, in yet another negative growth rate reported in the fourth quarter of 2019.

The index says with the construction sector primed to grow at 6.4 per cent in 2019 compared to a 6.9 per cent in 2018, the housing market started the year on a shaky footing on the back of a depressed economic outlook.

This is a warning that sentiment-led deterioration in house price growth could have a further impact on the scope for house price growth going into the second quarter.

“While the market remained largely depressed, marginal easing was supported by the supply-demand interaction, with a leaning towards more demand in a relative context,’’ KBA-HPI reads in part.

Demand shifts were based on concluded sales, which increased by 13.95 per cent.

Bungalows accounted for a 33 per cent demand increase while the demand for bungalows and maisonettes went down by 95.9 per cent and 57.1 per cent respectively during the quarter.

The trend, according to the index, reflects buyers’ adjustments with affordability being a key concern in the segment.

“The decelerating price trend is evidence of a property market with a distinct lack of momentum and characterised by a sign of normalisation of house prices as the market comes into balance after a prolonged period of sustained price growth,’’ noted KBA research and policy director Jared Osoro.

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