House prices in Kenya increased by 2.75 per cent during the first Quarter of 2015 compared to the previous Quarter’s 2.18 per cent increase. According to the Kenya Bankers Association Housing Price Index (KBA-HPI), although this increase is mild, it represents an upward trajectory.
According to KBA Director of Research and Policy, Jared Osoro, the price movements were characterised by the softening of the price movements for bungalows and maisonettes, with demand and supply dynamics pointing towards apartments significantly accounting for price movements during the quarter.
The price movements during the quarter represents a reversal of the previous quarter’s state where bungalows were the main drivers of price movements and prices maisonettes and apartments being stable.
According to the KBA-HPI released yesterday, the house price movements reveal the underlying demand-supply market conditions, with instances of price increase implying increased effective demand for the given units available in the market. They also reveal linkages between bungalows and apartments especially in the high end of the market where the demand for bungalows hinges on the desire to redevelop the property into apartments.
During the first quarter of 2015, the size of the house was a key price driver. This can be inferred from demand for the houses offered in the market that was influenced by a significant extent on number of bedrooms, bathrooms, and whether a house has a backyard and domestic staff quarters.
The same attributes featured prominently in influencing house prices during the fourth quarter of 2014, except that demand for houses available in the market then revealed a preference of fewer bathrooms if that will result in an additional bedroom.
Other factors that influenced the price of the houses include the size of the land the house was sitting on, social amenities in the neighbourhood, amenability of the house to re-development and security.
