Kenyan property prices expected to rise as interest rates fall
Kenya's property prices are expected to fall in the fourth quarter as lenders cut borrowing costs, a real estate advisory group has said.
Prices for all properties rose by 5.1 per cent in the third quarter from an increase of 3.7 per cent in the previous three months, Hass Consult's head of marketing, Sakina Hassanali, said.
"The recent benchmark rate cut by the Central Bank of Kenya has sparked life back into real estate as commercial banks are passing over the benefit through lower rates," she said in the capital, Nairobi.
Kenyan property prices have risen threefold since 2000, according to Hass Consult, although selling-price growth and new construction slowed after the central bank raised interest rates 12.25 percentage points to a record 18 per cent last year.
The central bank, which raised rates to defend the shilling currency and curb inflation, has cut the benchmark rate by 5 percentage points to 13 per cent this year.
Single-family house prices in the third quarter increased by 3.1 per cent, while prices for townhouses gained 1.2 per cent and those for apartments rose by 3.6 per cent, according to Hass Consult. Rental prices for all properties climbed 4.5 per cent from second quarter, it said.
Although the higher prices produced a construction boom, the slower sales uptake may have created a supply backlog of new homes, said Caroline Kariuki, managing director of The Mortgage Company, a mortgage broker.
"When they come into the market it will also impact on prices, pushing them down," she said.