Kenya smallholder tea farmers earn Sh63.6 billion from tea exports
Prices for residential houses fall but rent increases
By Ben Kinyanjui
Asking prices for residential property sales fell in the fourth quarter of last year though demand for houses to rent remained high.
According to HassConsult , a real estate consulting firm, asking prices fell by an average 1.3 per cent for detached houses and apartments but those for semi-detached houses continued to rise, albeit by a marginal 0.6 per cent.
HassConsult Head of Marketing and Research Ms Sakina Hassanali the rate of rent increases accelerated from October to December with asking rents for apartments, which had fallen during 2013, increasing by 4.2 per cent in the final quarter.
Rents for semi-detached apartments were also on the increase up a further 4.5 per cent on the previous quarter, and 19.4 per cent from 2012 while asking rents for detached houses continued to rise at a more subdued rate of 1.9 per cent in the fourth quarter.
“For the country's expanding middle class, the path of progressing from renting to purchasing is being blocked, now for a third year running, by the country's exceptionally high mortgage rates,” said Ms Hassanali.
“Typical first-time buyers of apartments and low-end town houses are continuing to find mortgages unaffordable, creating a demand bulge in rentals.”
She says this clustering saw semi-detached rents moving sharply upwards all year, rising by 4.5 per cent in the fourth quarter on third quarter levels, and by 19.4 per cent on a year earlier.
The final quarter also saw a renewed take-off in asking rentals for apartments, up by 4.2 per cent on the previous quarter, taking the rise for the year to 2.2 per cent, as the sudden rises more than offset earlier falls in asking rents.
In property sales, however, asking prices for town houses rose by 0.6 per cent from October to December, while asking prices for detached houses and apartments fell by 1.3 per cent.
"At a profound level, the failure of the mortgage market to provide a new route to home ownership is now shaping the Kenyan property market in a way that cannot be sustainable,” she says.
“Demand is bulging in rental properties, even as developers are being deterred from new construction by flat sales prices and rising costs. The sum is ever higher rents, in a population made up of landlords and tenants.”