Land and house prices Nairobi, Kiambu, Kajiado and Machakos slumped in the three months to June due to the effects of Covid-19, that saw demand drop.
According to the Hass Consult Index, house prices dropped 0.2 percent in quarter two, compared to a growth of 3.6 percent in a similar period last year.
On the other hand, land prices in the suburbs decreased by 0.7 percent in the period under review while in the satellite towns prices dropped 1.21 percent.
The drop is attributed to an oversupply of homes to a population that is experiencing reduced income due to job losses, pay cuts and closure of businesses.
“COVID-19 pandemic continues to disrupt the economy and as such investor interest has waned over the quarter but we are yet to see ‘fire sales’ on land as this asset class is still seen as the most resilient over the long term,” says Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult in the report.
An acre of land in Upperhill currently goes for Ksh525.7 million, making it the most expensive. An acre of land in Ruaka now goes for Ksh89.8 million asking price.
Land prices in Parklands and Spring Valley dropped by the biggest margin of 2.74 per cent and 2.59 per cent respectively. An acre of land in Parklands fell to Ksh390.8 millionwhile in Spring Valley the same dropped to Ksh169.3 million.
The cost of homes in Muthaiga rose 3.62 per cent to Ksh83.1 million and 1.95 per cent in Runda to Ksh93.9 million.
Homes in Donholm, Juja, Kilimani and Rongai fell 1.49 per cent, 2.52 per cent, 1.16 per cent and 1.79 per cent respectively.
As the effects of Covid-19 pandemic are felt across the country, 47 percent of middle class and high end tenants are asking for 25 – 30 percent rent reduction.
“This is the first full quarter under COVID-19 showcasing the property market under the government’s strictest social distancing measures which have since been eased. Property prices remain stable as most sellers, presumably those without any urgent cash flow requirements, are avoiding making rash decisions that will cost them in the long run,” observed the report.
The research which is done on quarterly basis reveals that real estate sector will continue experiencing market economic shocks into the third quarter as investors have adopted a wait-and-see attitude expecting prices to fall further.