The banking sector is projecting that real estate prices will strengthen in the coming months due to a lower interest climate, renewing hope in a sector that has been hard hit by expensive loans.
- The latest housing price index by Kenya Bankers Association indicates that the house prices weakened in the third quarter of 2024 compared to previous quarters, reflecting the ongoing price corrections in the housing market in response to reduced speculative demand and tighter credit conditions.
- In the quarter, credit to the real estate sector grew by 2.36%, but lending to the construction sector dropped by 13.47%.
- The rise in cement production and consumption suggests that certain segments of the construction industry remain active, likely sustained by ongoing infrastructure projects rather than new housing developments.
“We are seeing a correction in prices due to reduced speculative buying and changing financing conditions. At the same time, banks have started adjusting their lending policies to support homebuyers, which could stimulate demand in the coming months,”said KBA Director of Research, Samuel Tiriongo.
Some developers are struggling to secure financing for new projects, which could slow down the supply of new homes. The construction sector contracted by 2.0% in the third quarter of 2024, pointing to a difficult period for builders. However, cement consumption increased from 1,957,069 metric tonnes in the second quarter to 2,196,694 metric tonnes in the third quarter of 2024.
According to the the index, Townhouses remained the most expensive in the third quarter, with an average price of KES 38.63 million, followed by Maisonettes at KES 26.08 million. The high-end market saw the most expensive Townhouses going for an average of KES 59 million.
Apartments continue to dominate transactions, though their market share slightly declined as more buyers explored other housing options like Bungalows and Townhouses.
