Demand for apartments surge as buyers cut costs

Kenyans are downgrading their expenditure on houses with demand for apartments doubling in the second quarter of the year as buyers move away from costlier standalone units, a review of bank-processed house purchases shows.

Kenya Bankers Association’s (KBA) Housing Price Index released Monday reveals that most buyers chose the lower-priced apartments, which saw concluded sales rise to 75.6 per cent, compared to the 33 per cent reported in quarter one.

Bungalows and maisonettes accounted for 12.2 per cent each, indicating falling disposable incomes among home buyers.

KBA said sales rode on lower property prices that contracted by 0.2 per cent, on top of a 0.52 per cent drop reported in the first quarter.

“A rise in both the demand for apartments and bungalows and a decline in maisonettes is suggestive of a market leaning more in search for affordability among home buyers,” said KBA.

“Despite being on the negative side, the growth of house prices points to a stabilising market with the outlook broadly reflecting the prevailing economic challenges.”

KBA added that the stagnation of house prices at negative territory broadly reflects the headwinds in the economy that have influenced both demand and supply characteristics of the market.

This year investors have largely kept away due to a sharp decline of house prices last year, leading to a limited supply of units that is further compounded by low demand.

KBA chief executive Habil Olaka said the construction and real estate sector grew by 5.3 per cent being 0.38 percentage points lower than a similar period last year.