Kenyans to spend more to acquire houses in 2018 as prices predicted to rise
The interest cap is going to curtain full boom of the real estate sector as banks will continue to shy away from high risk borrowers.
Kenya Bankers Association House Price Index (KBA-HPI) has predicted that house prices will go up though gradually and potential home buyers, who held back on decisions to invest last year, will gradually enter the property market in the coming months.
“As the economy is anticipated to perform relatively better in 2018, a response would be expected in terms of house prices starting to take an upward but slow and delayed trend,” said KBA Director of Research and Policy Jared Osoro.
According to the Index that tracks price movements based on industry data and property valuation, house prices in Kenya rose by approximately 0.68 percent during the fourth quarter of 2017 compared to 0.42 percent in the third quarter.
“Access to capital is evidently integral in influencing the demand and supply dynamics in the housing market.” Mr. Osoro said.
“The results for quarter four continue to support the evidence that depressed demand is due to the slowdown in credit expansion. Households relying on credit for home acquisition have been adversely effected by the Banking (Amendment) Act of 2016, which introduced interest rate controls that are distorting the credit market,” he added.
The interest cap is going to curtain full boom of the real estate sector as banks will continue to shy away from high risk borrowers and focus instead on the government, denying individual home owners a chance to own their homes.
Central bank of Kenya has also expressed optimism about the country’s economic growth in 2018.
CBK governor, Patrick Njoroge forecasted the country's economic growth would speed up to 6.2 per cent in 2018 despite the interest rate cap holding back the economy.
The trend by buyers to focus on cheaper houses found in the range of middle-income market will however continue in 2018.
“The search for affordability has tended to steer both buyers and investors to the lower-middle income to middle income property segments,” said Osoro.
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