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Kenya reports 2.78 percent decrease in growth of house prices

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Kenya Bankers Association

On Friday, 24 May 2019, the Kenya Bankers Association reported that the rate of growth in house prices went down by 2.78 percent during the first quarter of 2019.

The other two instances were reported in the last quarter of 2013 and the third quarter of 2014.

The latest House Price Index attributes the decline to the constrained credit flows to both the supply and demand side of the housing market.

On the supply side, the Index associates the slowdown to a slump in the rate of credit growth to the building and construction sector between July 2017 and June 2018, which averaged at 1.2 percent.

“The influence of the credit supply to this sector, a good proxy of availability of funding for housing construction, manifested itself in supply constraints after a period of about a year,’’ reports KBA.

In addition, the volume of cement consumption also between July 2017 and November 2018 also dipped from 553 631 metric tonnes to 460 967, respectively.

On the demand side, among the factors highlighted as contributing to the decline include challenges facing prospective home buyers especially in accessing bank credit.

Other factors cited include a cautionary stance of many households due to strained economic conditions and squeezed household budgets.

“Although the price movements resonate with a general stability recorded since the second quarter of 2018, the new findings note that the stability is seen as tentative and could be a pointer to a depressed market if sustained,” notes the report.

– APA

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