The Kenyan real estate market is undergoing significant changes, with property prices adjusting across different regions due to shifting demand and economic conditions.
The latest Kenya Bankers Association (KBA) Housing Price Index (HPI) for Q3 2024 reveals a notable decline in house prices across most regions, driven by reduced speculative demand, tighter credit conditions, and a slowdown in the real estate and construction sectors.
However, certain areas continue to perform well, attracting buyers and investors despite the broader market contraction.
High-end market: Kileleshwa, Kilimani, Lavington, Westlands, Spring Valley, Riverside, Milimani (Kisumu), Milimani (Nakuru), Runda, Karen, Garden Estate, Parklands, Ridgeways, Muthaiga, Loresho, Kitisuru, Adams Arcade, Nyali, Mountain View, Nyari.
Nairobi’s affluent neighbourhoods like Kileleshwa, Kilimani, Lavington, Westlands, Runda, and Karen, continues to command the highest property prices in Kenya.
According to the KBA report, townhouses in this segment recorded an average price of Sh59 million, making them the most expensive property type.
Maisonettes followed at Sh46.19 million, while apartments averaged Sh18.10 million.
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Despite an overall price correction in the housing sector, the high-end market saw increased activity, rising from 33.7% of total transactions in Q2 2024 to 37.2% in Q3 2024.
This suggests that demand for luxury homes remains resilient, particularly among high-net-worth individuals and investors targeting rental properties.
Mid-market segment: Thindigua (Kiambu Road), Kiambu, South B, South C, Kabete, Komarock, Imara Daima, Membley, Buruburu, Rongai, Waiyaki Way (Uthiru, Regen, Kinoo, Kikuyu), Mbagathi road, Ngong Road, Langata
Areas such as South B, South C, Lang’ata, Rongai, Kiambu, and Komarock, offer relatively affordable housing options compared to high-end neighbourhoods.
The KBA report indicates that townhouses in this region are priced at an average of Sh50 million, while maisonettes go for Sh15.50 million and apartments for Sh11.85 million.
However, the mid-market segment saw a slight decline in activity, with transactions dropping from 18.3% in Q2 2024 to 17.5% in Q3 2024.
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This trend suggests that some buyers may be holding back on purchasing due to economic uncertainties or shifting preferences towards more affordable housing options.T
Affordable housing market: Athi River, Mlolongo, Mavoko, Nakuru, Ngong, Ruaka, Syokimau, Embakasi, Kahawa Wendani, Thika, Mtwapa, Utange, Kitengela, Kiembeni, Nyeri, Likoni, Eldoret, Ruiru, Kilifi,Thika road (Kasarani, Roysambu, Ruaraka), Meru, Bungoma.
Areas such as Ruiru, Thika, Kitengela, Kahawa Wendani, and Eldoret, represent the lower-market segment, offering relatively affordable housing options.
The report shows that maisonettes in this region averaged Sh19.93 million, apartments Sh22.75 million, and townhouses Sh10.87 million.
However, this segment experienced a decline in activity, with transactions falling from 48.1% in Q2 2024 to 45.3% in Q3 2024.
This drop is attributed to reduced credit availability and a shift in demand towards rental housing as buyers struggle with affordability.
Property prices across different regions are influenced by various factors, including demand, affordability, credit supply constraints, and housing preferences.
High-end areas remain in demand among affluent buyers, keeping prices stable despite broader market corrections, while the mid-market and affordable segments are slowing down as economic conditions make buyers more cautious.
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Limited financing options have also impacted supply and pricing, with bank lending to the real estate sector growing marginally by 2.36%, while lending to the construction sector declined by 13.47%, making it harder for developers to complete projects.