|HassConsult index shows sales have gone down in Nairobi this year|
|Written by Business Daily reporter for The Business Daily 1st October 2009|
The prices of upper and middle class homes in Nairobi are falling again after a surge in 2007 that covered last year, a new property index by real estate firm HassConsult shows.
Property agents, the report says, have this year been reporting a marked slowdown in house sales and property turnover. The decline is attributed to recession and the resultant increased scrutiny by lenders. “The spread of price reductions speak to the general impact of recession reduced spending power and reduced credit lines, rather than spots of over-supply such as an access of new apartments in any one suburb.”
The index to be published quarterly shows the price trend across houses, villas and apartments in seven of the city’s up market suburbs: Karen, Kileleshwa, Kilimani, Lavington, Nyari, Riverside and Westlands.
Covering five years to date, the information by the property firm shows that house prices also fell throughout 2005 and 2006, dispelling the market wave that the city enjoyed a sustained property price boom at the top end of the market.
“The new property price index is not an absolute guide to the price of your home compared to last year, and it has only included upper and middle income housing.” says HassConsult. At the end of 2006, the average property price in the suburbs covered was 15.7m. By the end of 2008, it was 20.2m, it says.
Property prices continued rising even after the poll chaos, increasing by a further 2.3% on the last quarter of 2008. However, they declined by 1.4% in the second quarter of this year, and by 2.2 per cent in the third. This took the price of the ‘average’ residential property from Sh20.4m in the second quarter to Sh19.9m in the third quarter.
The HassConsult data cover 50 property ‘types’ handled by the firm and gives the closing sales prices and offer prices from 13 other estate agents across the country.
“The results are clear. Property prices were falling in 2005 and 2006 and they are now falling again.” it says.
Releasing data up to the end of the third quarter this year, HassConsult reported that house prices were rising from 2007 onwards, by more than four per cent in each of several quarters up to the end of 2008, estimated at an average 30 per cent across two years.
The drop in the prices coincides with the packaging of new products and new partnerships between mortgage lenders and property developers that target the middle-income class.
Earlier this week, Housing Finance, the country’s leading provider of mortgage finance, announced new financing options for buyers at the middle-income development on the Thika Road, Flame Tree Park. This follows initiatives offering improved mortgage terms to middle-income savers, and the entry of commercial banks into broader mortgage financing.