House prices in Kenya improved by 0.22% in the 4th quarter of 2020, after seven quarters of contraction according to a report by the Kenya Bankers Association. The jump in the House Price Index was a result of the demand and supply dynamics in the real estate sector.
According to the KBA report, the supply of houses remained unchanged in the last quarter of 2020, partly due to limited credit to the construction and real estate sector. An under-supply of new units led to the rise in house prices as buyers bought units completed in previous quarters. Additionally, homebuyers preference for newer units pushed up the price of houses.
The Kenya Bankers Association CEO Dr. Habil Olaka said that house prices in the last quarter of 2020 were driven by regional differences, indicating the key role the location of a house plays in determining its price. In the previous quarters, “variation in house prices was mainly driven by structural factors, particularly the size of the plinth area,” said Dr. Habil Olaka.
The number of bedrooms, the number of floors for each unit, and the age of the houses also influenced house prices.
In the period under review, the price of apartments rose faster than the price of bungalows and townhouses due to the high demand for low-cost units.
The total units sold in the fourth quarter of 2020 increased sharply to 314 units, compared to only 57 units sold in the third quarter of the same year. 71% of the units sold were apartments, 23% were maisonettes, while bungalows made up only 4% of the sales.
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