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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

House price growth dented by political impasse, interest rate caps

by Ronald Njoroge NAIROBI (Xinhua) -- Kenya’s current political impasse and interest rate caps have lowered the growth rate of house prices, bankers said in a report released on Friday.

According to the Kenya Bankers Association (KBA) - Housing Price Index (KBA-HPI), there was a 0.42-percent increase overall in house prices in the third quarter of 2017, down from 0.98 percent in the previous quarter.

"Overall, house prices in Kenya for the third quarter of 2017 posted the lowest rate of growth registered in the last three years, on the backdrop of the current political environment and slowed private sector credit," the report shows.

"This is an indication that there is no relief for the declining trend in the rate of house prices increase since the third quarter of 2015," it said.

KBA Director of Research and Policy Jared Osoro said that the trend on the growth in house prices mirrors that of credit growth to the private sector.

"Credit growth has slowed down in 2017 as a result of the introduction of the interest rate capping law which has further worsened the already declining credit to private sector prior to its introduction and thus discouraged banks from lending to the private sector," Osoro said.

He added that the generally depressed demand in the economy and the slowdown in credit expansion has reduced the numbers of households that can rely on the credit market for home acquisition.

According to Osoro, the political environment seems to be affecting both sides of the market.

"On the demand side, potential home buyers seem to be holding back on decisions to invest in home ownership while on the supply side, investors in real estate could also be on a wait-and-see mode," he said.

             

 

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