The growth of housing prices in Kenya is slowly giving signs of recovery, after falling for six consecutive quarters. Kenyan Bankers Association’s (KBA) pricing index shows that housing prices for the three months to June 2020 decelerated by 0.20%, compared to 0.51% in the previous quarter.
The KBA report says that the negative trend in prices mirrors headwinds in the economy, which continue to suppress demand. Housing sales for 2020 Q2 fell by 40% compared to the last quarter. Despite low demand, prices remained relatively stable due to the tendency of housing prices to resist reductions.
“With demand remaining depressed, the concluded sales during the second quarter of the year represented a nearly 40 per cent drop from the previous quarter,” reads the report.
The sharp decline in housing prices in 2019 discouraged investment in the market, thus limiting supply, reflecting on the lagged demand on imports of construction materials. Cement demand grew in the quarter, primarily driven by public sector construction as opposed to housing.
Generally, weak economic conditions manifested in the construction and real estate sector, which show low activity despite year on year improvements. KBA CEO Habil Olaka says:
“While showing positive growth during the first quarter of 2020, the broader construction and real estate sector manifested the weakness in the broader economy with its expansion of 5.3 per cent being 0.38 percentage points lower than a similar period last year.”
The report also notes that apartments have now regained their dominance in the market, accounting for 75.6% of housing transactions.