Kenya: Central Bank Rate Cuts Driving Property Rush
Nairobi — Kenya’s property market is enjoying another buoyant streak after difficult times early last years.
The latest Annual Housing Report released by Property analysts, Hass Consultants indicates that property values in Kenya have increased almost four-fold over the last decade.
The report shows that the average property value has increased from Property values in the country have increased by 3.36 times since 2000 as the average value for a property has gone from $82,352 in December 2000 to $280,000 by December 2012.
“The last quarter has seen a substantial rise in property values across the country. There was a deep slump in the last quarter of 2011 but the situation has witnessed a complete turnaround,” said Hass Consult Head of Research and Marketing Sakina Hassanali while releasing the report in Nairobi.
The growth in property value can be largely attributed to the fast falling bank interest rates which have encouraged borrower of capital and mortgage takers to invest in property.
The year 2011 witnessed the highest interest rates in Kenya. This was accompanied by spiraling inflation that seriously impacted on borrowing.
The recent months have however seen a sharp decline in inflation currently standing at four per cent while the Central Bank of Kenya has drastically reduced the base lending rate to less than 10 per cent.
“The interest cut witnessed since mid-2012 has playing a key role in bring borrower back to the banking halls. So has been the increase in activity in the property market and investment on a high again. This can only mean one thing, an increase in property value across the board,” she said.
The analysts however contended that the house price in major cities like Nairobi, Kisumu, Mombasa and surrounding areas will reduce following competition from projects currently under construction.
Increasing infrastructure projects activity in major cities especially Nairobi has caused a major drop in areas hitherto considered as serene and a preserve of the well-to-do.
Such areas referredto as leafy suburbs like Lavington, Westlands, Kileleshwa, Karen, Runda, Muthaiga among others are currently witnessing increased activity in terms of road construction, drainage systems overhaul and an unprecedented increase in high-rise buildings.
This has caused inconvenience especially interrupting the privacy that is mostly associated with such residential areas. Consequently, property prices in such areas have recorded a dip.
The most increase in property prices was recorded in the rental units’ category where the analysts argued that the rent increases has reached levels where the tenant purchasing power cannot hold any further hikes.