The growth in house prices slowed down in 2021 from a strong uptick recorded during the last quarter of 2020, the latest Kenya Bankers Association Housing Price Index (KBA-HPI) report shows.
According to the report, house prices on average went down by 1.82 per cent in the first quarter of 2021, overturning the marginal recovery of 0.22 per cent recorded in the fourth quarter of 2020.
The report attributes the decline to a general price correction trend as well as slow economic growth and weakened households’ purchasing power. In the second quarter, the prices softened by 1.62 per cent, 3.70 per cent in the third quarter and 3.99 per cent in the fourth quarter of 2021
KBA Research and Policy Director Samuel Tiriongo noted that the sharp drop in prices in 2021 reflected subdued investments that limited the rollout of new supply amidst easing demand.
“The broader construction and real estate sector manifested declines in the growth trajectory in the fourth quarter of 2021, growing by 6.0 per cent during the quarter down from 6.7 per cent growth in the third quarter. Over the same period, real estate sector activities expanded by 5.7 per cent in the fourth quarter compared to 7.1 per cent in the third quarter,’’ Samuel Tiriongo KBA Research and Policy Director.
Housing transactions in the lower market segment, and particularly apartments, dominated during the year, accounting for over 58 per cent of all transactions.
However, the demand for bungalows continued to wane, contracting by half in the last quarter of the year and accounting for 13.3 per cent of all transactions.
The share of Maisonettes, however, rebounded to 29.2 per cent in the fourth quarter, from 22.2 per cent in the third quarter.
Townhouses, which have been characterized by dormancy since the first quarter of 2021, registered some resurgence.
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