House prices in Kenya for the third quarter of – 2017 posted the lowest rate of growth registered in the last three years, on the backdrop of the current political environment and slowed private sector credit, a new banking industry report shows.
Housing Price Index released by the Kenya Bankers Association shows that there was a 0.42 percent increase – in overall house prices between July, August and September.
This was a reduction from the previous quarter’s 0.98 per cent growth and the lowest price increment posted since the third quarter of 2015.
“This is an indication that there is no- relief for the declining trend in the rate of house prices increase since the third quarter of 2015,” the report reads in part.
For the last year, housing prices have been on a declining curve with increase in prices dropping from a high of 2.20 per cent as at the third quarter of 2016 and falling to 1.58 per cent in the fourth quarter of the same year.
This declining trend peaked in the first quarter of this year (between January and March) with prices increase falling to 1.10 per cent, then dropping further to 0.98 per cent in the April-June period of this year, and then sliding further to the current rate of 0.42 per cent.
According to the KBA Director of Research and Policy Jared Osoro, the trend on growth in house prices mirrors that of credit growth to the private sector.
Credit growth has slowed down this year as a result of introduction of – law capping interest rates which has further worsened the already declining credit to private sector prior to its introduction and thus discouraged banks from lending to the private sector.
“With the generally depressed demand in the economy and the slowdown in credit expansion, households relying on the credit market towards home acquisition have been adversely affected,” Osoro said “This has consequently influenced the house prices trend.”