Property prices and rentals for the high-end of the market stagnated and even fell in the last 15 months.

But similar properties in the middle-income category recorded a spike of up to 20 per cent for both rent and prices over the same period.

Farhanna Hassanali (left) marketing manager at HassConsult and Nathan Luesby, a consultant with Hass Property Index. [PHOTO: WILBERFOCE OKWIRI]

According to the Hass Property Index fourth quarter findings released yesterday, the ballooning middle class and increased financing options occasioned an unprecedented high demand for housing in areas close to the city brought.

Market correction

This saw property values and rents charged on housing shoot in virtually all areas in Nairobi and its environs.

The report also noted a market correction as a result of an oversupply of high-end housing units in the last three years. As a result, both rent and sale price of high-end houses have remained largely stagnant.

“Only so many people can afford to buy or rent the high-end properties,” said Nathan Luesby, a consultant with Hass Property Index and the proprietor of Property Leo, real estate web-based property portal.

“The statistics also show that middle income areas continued to witness an increase in both selling prices and rents charged on the same due to increased demand from the emerging middle class.”

Property analysts say the development signals the immense business opportunities in the middle and low end of the market where there is high demand for residential housing, especially in Nairobi.

“What this means is that there is going to be opportunities for discounts and bargains on property transactions in areas where stagnation in prices and rentals have been most prominent,” said Farhanna Hassanali marketing manager at HassConsult, a property company.

“It is also a clear signal to developers to start looking at the lower-end of the market where demand is highest and housing needs are most acute,” she said.

In Nairobi, South B and C, Buruburu, Doonholm, Nairobi West among other similar typed category neighbourhoods registered the highest property price and rent appreciation.

Thika and its environs, Brookside and Westlands registered the most notable drop in prices in the last 15 months of between 6 per cent and 5 per cent respectively.

House prices in areas such as Runda and Muthaiga also recorded a dip while the rest of the upper middle income recorded virtually stagnant trends with rent and pricing dips of just around 1 per cent recorded in some areas.

Property analysts project that this year will register a slowdown in the level of activity in the real estate sector due to the current prevailing high interest rates and the risk of political uncertainty given the election year.

“The good thing is that Kenya still has very few mortgage holders saw the likelihood of mass defaults and foreclosures is minimal,” said Ms Hassanali.

“However, we now see developers retreating in speed, many building plans getting shelved or postponed.”