A report by HassConsult released on Tuesday, July 30, indicates that the price of rentals and house sales has dropped in Nairobi’s suburbs.

The worst hit concerning rent are Upper Hill and Muthaiga, and HassConsult attributes this to challenging economic conditions.

In the second quarter of 2024, rental prices for Nairobi suburbs and satellite towns increased by a marginal 0.01% as few people sought to rent in these areas.

In the report, satellite towns around Nairobi came off best, with average increases in rent of 2.1%; while it was down by 0.9% in suburbs.

HassConsult has attributed the decline of suburban rental rates to the rising cost of credit. Property owners are reluctant to increase rents following increased taxation and inflation that have reduced disposable income.

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In Upper Hill, apartments recorded the lowest quarterly change in rent at 4.3%. Muthaiga also recorded the poorest annual rental appreciation with a 4.3% change over the year.

Not only did rental growth decline in Upper Hill but so did the prices of house sales. Prices of Upper Hill apartments decreased by 3.9% in Q2 2020 and by 8.3% in annual sales prices.

“While higher interest rates on mortgages do not have a significant impact on market-wide property price movements due to the low mortgage participation in the country, the rise in rates has the effect of reducing market liquidity, in general, resulting in a dampening of demand,” Sakina Hassanali, Head of Development, Consulting, and Research at Hass Consult stated.