House prices sink further as demand dries up

House prices have remained in negative territory going into the second half of the year from subdued investments in real estate and an accompanying lower demand.

According to the Kenya Bankers Association (KBA) Housing Price Index, house prices shed a further 0.2 percent in valuations between April and June extending losses to the sixth straight quarter.

House prices in the index’s running series last improved at the end of 2018.

“The stagnation of house prices at negative territory broadly reflects the headwinds in the economy that have influenced both demand and supply characteristics of the market,” noted the report.

Concluded sales during the quarter meanwhile represented a near 40 per cent slide from the start of the year to March to further mirror the tough operating environment.

The dip in prices was however slower in comparison to the start of the year marking an indicator of optimism for property dealers.

The soft decline in prices is highly attributable to the downward stickiness of prices- a characteristic of the housing market in Kenya.

Homebuyer’s preferences shifted back to apartments in the period as the demand for townhouses slowed down.

Apartments took up 75.6 percent of completed sales in the quarter ahead of bungalows and maisonettes.

“A rise in both the demand for apartments and bungalows and a decline in maisonettes is suggestive of a market leaning more in search for affordability among home buyers,” the report added.

The majority of transactions were completed in Thindigua, Kiambu, South B, South C, Waiyaki Way, Ngong Road and Langata.