HassConsult has released its Hass Property and Land Price Index for the Second Quarter of 2024, showing that prices maintained an upward trajectory, despite a tough economy and input costs for developers.
The property price index revealed a modest one percent increase in property sales prices across Nairobi, a growth, while slower than the previous quarter’s 2.7 percent, which marked the eighth consecutive period of price increases, highlighting a trend of stability in the property market.
According to a press statement, the recent data illustrates that, despite high interest rates and a strengthened shilling impacting foreign buyer advantages, property sales prices have continued to rise albeit at a lower rate.
Head of Development, Consulting, and Research at Hass Consult, Ms Sakina Hassanali, noted that while higher interest rates on mortgages don’t have a significant impact on market wide property price movements due to the low mortgage participation in the country, the rise in rates have the effect of
reducing market liquidity in general resulting in a dampening of demand.
‘So far, the property market has shown resilience with price stability still being witnessed across most areas,’ said Hassanali.
In terms of price growth, Nairobi’s satellite towns outperformed its suburbs with an average 2.1 percent increase compared to a 0.9 percent decrease in the suburbs. This rise in satellite towns can be attributed to accelerated urbanisation, which has bolstered demand and pushed up asking prices.
Meanwhile, rental prices experienced a slight increase of 0.01 percent in the quarter, however, property owners are cautious about raising rents to retain tenants amid higher taxes and inflation, which has constrained disposable income.
Further, rental yields differ significantly between Nairobi’s suburbs and satellite towns. In the suburbs, the average yield increased to Seven percent by the end of June from 6.9 percent in March. Conversely, rental yields in satellite towns decreased slightly from 4.9 percent in Ma
rch to 4.8 percent in June, reflecting, varying market conditions in these areas.
On the other hand, land prices in the city’s 18 suburbs rose by an average of 1.3 percent per acre in the first quarter of 2024, while in the satellite towns the price was up by an average of 3.03 percent.
On an annual basis, the price of an acre in the suburbs rose by five percent, while in the satellite towns it was up by 11.2 percent.
Lavington and Spring Valley were ahead of the queue in price growth among suburbs in the first quarter at 4 percent and 3.8 percent respectively, while Kileleshwa was the only one to record a price decline at a marginal -0.1 percent.
The average price per acre in the suburbs is now at KES 203.7 million, having crossed the KES 200 million mark for the first time in the last quarter of 2023.
‘The growth in prices across 17 of 18 suburbs, despite the slowdown in pace in the quarter compared to the last quarter of 2023, shows that the upper end of the market is sustaining demand,’ highlighted H
assanali.
In the towns, Kiserian, Limuru and Ongata Rongai led quarterly price gains at 9.4 percent, 8.4 percent and 7.8 percent respectively.
‘Satellite towns are driving the revival of land as a competitive asset class with the average annual growth of over 10 percent. With interest rates projected by the Central Bank of Kenya to fall in coming months, the stable price growth seen over the last two years should make land even more attractive as an asset,’ she added.
Concurrently, satellite towns are now poised to overtake government Treasury Bills in annual returns. On an annual basis, 9 out of 14 satellite towns made double digit price gains, led by Ongata Rongai at 16 percent.
Developers have also shown a preference for areas whose prices are lower than the satellite town average of KES 28.8 million, as they keep an eye on overall costs due to higher building input prices.
Source: Kenya News Agency