|Demand for housing in upmarket estates down|
|Written by Morris Aron for The Standard Friday 2nd October 2009|
You could soon afford to buy a house in one of the high-end estates in Nairobi, or other major urban areas as demand for such properties starts to fall.
After months of speculations, it appears the property bubble, that most real estate developers had dismissed, may have burst and high-end residential properties in Nairobi are now feeling the heat, a survey by a leading property firm says.
The Hass Property Index, released yesterday, by Hass Consult, shows that residential house prices in Nairobi’s posh areas fell by 1.4% and 2.2% in the second and third quarter consecutively.
This trend is in deep contrast with 2007 and 2008 when house prices appreciated by about 4% every quarter-translating to a 30% per appreciation per year.
“The index shows that house prices are now falling after a surge in prices in 2007 and last year”, said Farhana Hassanali of Hass Consult.
“However, the development also brings along immense buying opportunities”, he added.
The report cited recession, high inflation and falling remittances from the Diaspora as some of the reasons for the decline.
A demand-supply mismatch in the high-end market, which resulted in over supply of property particularly apartments, coupled with excessive” speculation by developers may have also fuelled the bubble burst, added the report.
In addition, latest stringent measures adopted b mortgage financiers, where those seeking loans to buy a house are screened to reduce incidences of loan defaults has also muzzled up access to financing.
“Though only for the high-end market, for the first time we are able to establish some trends, even if preliminary”, said Jenny Luesby of African Laughter, the firm contracted to carry out the survey.
The announcement marks the first admission by a property company that the money-minting era in the real estate sector that spanned three years may be ending.
Last year, Ben Woodhams the managing director of Knight Frank, a property firm warned ha the level of transfer transactions for properties valued above Sh20 million was near ‘stand still’.
Despite the warnings, most developers and financiers continued denying the facts saying demand for housing was at its peak.
The researchers arrived at their finding and conclusion based on information from 13 other leading real estate firms and is seen by many as the first actual attempt in the quest for a property index.
Past attempts to have a property index have failed after speculations opposed the move on grounds that it could distort pricing trends in the real estate market.