Property Price Rises in Kenya Start to Decline
18 July 2011
The latest report from HassConsult Real Estate Index shows that residential property price increases in Kenya started to slow in the second quarter of 2011. This is probably due to higher inflation rates.
HassConsult is the only property pricing index in Kenya, and its report found that the average house price increased by 1.9% during the second quarter compared to 4.4% during the first quarter. As this increase is below the rate of inflation, in real terms it represents a decline in residential property prices.
Property investors in Kenya have done pretty well over the last decade, as investments have proved more profitable than those in stocks and shares. The Kenyan economy expanded by a very healthy 5.1% last year, which was partially driven by agriculture and construction.
However HassConsult expects conditions to be a little more constrained this year as construction costs have increased, and buyers generally have much tighter budgets. The increase in construction costs is down to the higher price of crude oil, but although demand for housing is strong, it is not sufficient enough to allow higher property prices.
The property industry in East Africa is still developing, and the International Real Property Foundation is hoping to establish a regional training centre for professionals in Kenya, Rwanda and Uganda.
The purpose of the foundation is to make sure that property professionals in these countries are trained in international standards of practice and ethics, as the property market nowadays is very much a global affair. Emerging markets such as Kenya frequently lack the international standards required by foreign investors.