House prices in satellite towns register first historical drop – Hass Index
Home owners in Nairobi’s satellites towns took their first beating in more than a decade as both house and rental prices registered a dip in 2019, a new sector report shows.
The report from the Hass Property Index reveals a 0.5 percent drop in house prices, a first for the 12-year old tracker with rents too showing a similar trend having shed off 2.1 percent of values in the review period.
The historical slump for the segment is attributed to the stay of a challenging economic environment across the past 12 months as mirrored in the inaction by home buyers and less demands by landlords.
“When there is an economic slowdown the first people that get hit are the middle class. Satellite towns- where the middleclass reside have therefore seen an immediate shift,” said Hass Consult Head of Research Sakina Hassanali.
Home owners/investors in Juja were the hardest hit having seen a 9.6 percent fall in house costs beyond the sales average index’s retreat of 3.5 percent.
Equally, landlords in Kiserian took the weight of the recorded rental depreciation as rent prices plunged by 7.8 percent.
Land investors were meanwhile spared from the general slump in the housing market as growth in satellite towns prices grew by 6.93 percent to beat the 1.69 percent recorded appreciation in suburbs land valuations.
Kitengela town led the pack having realised the highest gains at 10.71 percent year over year to see the average value of land per acre peak at Ksh.12.2 percent.
Nairobi suburbs meanwhile registered mixed growth results in the review period with valuations in relative high-density areas cooling off from the exhibition of glut in the majority of housing segments.
Home valuations in the suburbs fell at their sharpest in Langata with Riverside corresponding with the weakest change in land costs over the review period.
Nevertheless, pockets of value were visible in the broad segment with Ridgeways carrying the highest return on home sales with Kitisuru topping the suburbs with the highest return on land.
While the real estate sector remained largely depressed in 2019, Hassanali holds out for a better year for the key sector supported in large part by the expected recovery of private sector demand which will in part help offset some of the distressed properties.
“I’m hoping 2019 is the worst of it. From what I’ve seen in January we are quite positive about 2020. We would expect to see more growth from more money in the market to create a sector upturn,” she added.