Nairobi Housing Market Cools as Expensive Loans Deter Buyers

Nairobi’s housing market is showing signs of a slowdown, with home price growth dipping in the first quarter of 2024. This trend is attributed to a significant rise in borrowing costs, which has dampened buyer demand.

A report by real estate firm HassConsult revealed a quarterly growth of only 2.7% for house prices in Nairobi and its surrounding areas. This pales in comparison to the previous quarter’s growth of 4.1%. Rental price increases also mirrored this slowdown, expanding at a meager 0.4% compared to 2.5% in the last quarter.

Analysts point to the Central Bank of Kenya’s (CBK) decision to raise the base lending rate to 13% as a key factor. This move tightened credit conditions, making it more expensive for Kenyans to secure mortgages. The reduced liquidity in the market has put a damper on buying power.

Data from HassConsult shows that the average price of mid- to upper-class properties in Nairobi reached Sh35.9 million (approximately $320,000 USD) by the end of March 2024. The report further details the average value of a four- to six-bedroom house at Sh39.7 million (approximately $358,000 USD) and a one- to three-bedroom property at Sh13.1 million (approximately $117,000 USD).

“The rise in asking prices moderated due to tighter credit conditions,” explained Sakina Hassanali, head of development, consulting, and research at HassConsult. “The increase in the CBK’s base lending rate has limited access to affordable credit, impacting buyer activity in the market.”

While some sellers may need to adjust their asking prices to attract buyers in this new credit environment, the overall impact on the market remains to be seen.


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