Home prices in Kenya rose at faster rate compared to advanced economies like South Africa, United States and United Kingdom, buoyed by a bulging middle class, a property price index shows.
HassConsult, which conducts the property pricing index in Kenya and largely sells homes in the high and middle segments of the market, said prices of stand-alone houses grew the most by 7.8 percent in the year to June.
Kenya’s property prices are growing faster both in the short and long-term, tramping major world economies that have historically topped the global charts for house prices, raising the costs of owning homes while giving property investors handsome returns.
HassConsult reveals that Kenya’s property prices growth outpaced South Africa, which recorded a growth of just 3.46 percent, the US (2.38 percent) and the UK (2.83 percent) in the year to June. It also trampled Australia (4.74 percent), Singapore (4.15 percent), Switzerland (2.58 percent), France (1.11 percent), and Canada, whose property prices shrunk by 1.25 percent over the same period.
According to Hass Consult, this surge has been driven by rising demand for residential property in Nairobi and other cities across the country, supported by a fast-growing youthful and working population.
It reckons that growth of middle class has seen a sizeable workers with spending power and are looking at real estate as an investment option and for home ownership.
“The answer lies in our expanding middle class,” said Sakina Hassanali, co-CEO of Hass Consult.
“South Africa has a far larger mortgage market than ours, but its middle class has been growing very slowly. Ours, by contrast, continues to add high earners at speed.”
A long-term outlook of the property prices across the nine markets also reveals that Kenya’s have grown the fastest, by 425 percent between 2000 and 2025, while the closest rival the US saw just a 201 percent rise.
This is largely because unlike the other markets, Kenya’s population is largely young and just entering the job market with many fast-rising to high-income brackets, fuelling demand for dwelling units.
Detached houses have seen the sharpest jump in prices both in the short and long terms, an indication that majority of residential property buyers are seeking places to live ultimately and not just buying as an investment vehicle.
“Kenyan professionals rarely pay out the top level rents of almost a quarter a million shillings a month for detached houses, preferring to buy once they have that kind of money,” noted Ms Hassanali.
“While the latest wave of departures due to aid cuts and international NGO closures has left vacant houses and reduced rents, detached house prices have continued to rise strongly.”
The prices of detached houses grew at 10.9 percent in the year to June, while all houses grew at 8.9 percent, semi-detached houses at 2.8 percent, and the cost of apartments rose by 0.7 percent, all beating the inflation rate of 3.8 percent.
While the surge in prices made good returns for property investors, it piled pressure on Kenyan home buyers and aspiring home owners amidst a growing urban population in the country.
Ms Hassanali argued that while she doesn’t foresee the prices easing anytime soon, the rising returns will attract more investments into the property industry, ultimately easing the supply pressures in the Kenyan property market and helping bring down prices.
