In the face of mounting economic pressures, Nairobi's property market has shown remarkable resilience in the second quarter of 2024.
Despite inflation and increased taxes, the market registered a 1 per cent rise in property sales prices, marking the eighth consecutive quarter of growth.
This consistent upward trajectory highlights the stability and enduring demand within the region's real estate sector.
The latest Hass Property Index reveals that Nairobi's satellite towns outperformed the city's suburbs, with a notable 2.1 per cent increase in property prices compared to a 0.9 per cent decline in the suburbs.
This trend is largely driven by accelerated urbanisation in satellite areas, which has spurred demand and subsequently elevated asking prices.
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In particular, Kiserian emerged as a standout performer with the highest quarterly increase in sales prices at 5.2 per cent, reflecting its growing appeal among property buyers.
The rental market, however, exhibited relative stability with only a slight increase of 0.01 per cent in rental prices.
This subdued growth can be attributed to property owners' cautious approach to rent adjustments, aiming to retain tenants amid the economic downturn.
The prevailing high taxes and inflation have reduced disposable income, making tenants more sensitive to price changes.
As a result, rental yields varied, averaging 7 per cent in Nairobi’s suburbs and 4.8 per cent in the satellite towns.
An analysis of different property types revealed varied trends.
Detached houses, semi-detached houses, and apartments each experienced unique market dynamics. For instance, Upper Hill's apartments faced a 3.9 per cent decrease in sales prices, contrasting with the robust performance of houses in Kiserian.
Notably, Juja's housing market recorded the highest annual increase at 13.1 per cent, showcasing a significant appreciation in property value.
Sakina Hassanali, Head of Development, Consulting, and Research at Hass Consult, provided insights into the market's performance.
She noted, “While higher interest rates on mortgages don't have a significant impact on market-wide property price movements due to the low mortgage participation in the country, the rise in rates has the effect of reducing market liquidity in general resulting in a dampening of demand. So far, the property market has shown resilience with price stability still being witnessed across most areas.”
The Hass Property Price Index Q2 2024 also highlights the long-term growth of the property market, with values increasing by 5.05 times since 2000.
This impressive growth underscores the enduring appeal and investment potential of Nairobi's real estate sector, despite the current economic headwinds.
As the city continues to navigate these challenges, the property market's resilience and adaptability remain key factors in its ongoing stability and growth.
The consistent rise in property prices and stable rental market conditions signal a strong underlying demand, reinforcing Nairobi's position as a prime destination for real estate investment.
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