Rate of growth in house prices drops 2.78%, largest decline since 2013

The Kenya Bankers Association-Housing Price Index shows that growth in house prices declined by 2.78 per cent in the first quarter of 2019. It is the largest decline since 2013, the base period for the Housing Price Index. The slowdown is attributed to the drop in access to credit in the building and construction industry. Between July 2017 and June 2018, the rate of credit growth to the housing sector averaged at 1.2 per cent, a significantly low growth rate. According to a report by the Bankers Association, the volume of cement used between July 2017 and November 2018 dropped from 553,631 metric tonnes to 460,967 metric tonnes. “The influence of the credit supply to this sector, a good proxy of availability of funding for housing construction, manifested itself in the supply constraints after a period of one year,” KBA noted. On the side of home buyers, demand was low due to limited access to bank loans and decreased spending as a result of the harsh economic environment. Although the movement in house prices has been stable since Q2 2018, KBA findings note that if the price stability is sustained, it could be an indication of a depressed market. In…

Are You Aware of These 6 Costs When Buying Property?

Are You Aware of These 6 Costs When Buying Property?It is interesting to note how so many buyers and investors at large experience a total blackout when it comes to the transaction fees related to buying property. When you get to the point of buying a house, the devil is in the detail. You need to be aware of the amount of money you will spend throughout the entire buying process. Apart from the sale price, there are other real estate transaction fees you should keep in mind: mortgage fees, paying for a lawyer, and taxes related to property. Not forgetting to mention the hidden costs you might not be aware of. These pointers will help you make the right decision when the time to buy a house comes. In turn, you will make the right investment decision knowingly. What fees should you keep in your mind when buying property in Kenya? You Have to Get a Lawyer The importance of getting a lawyer is like having oxygen: you can’t do without one. Lawyers in Kenya are regulated by an Act of Law known as the Advocates Remuneration Order. Sometimes, the fees that the lawyers charge are regulated by ethical principles and…

Three golden tips for first-time land buyers

Having been in real estate for four years now, Moses Muriithi, the CEO of Fanaka Real Estate better understands nuts and bolts of land buying in Kenya, especially in Nairobi where finding genuine sellers is about as hard as finding honest lawyers. Business Today asked Mr Muriithi some of the mistakes that many prospective land buyers, more so first time purchasers, make and he looked at it differently and offered tips on what to consider before purchasing land. It turns out, ignoring these tips often results in these big mistakes. 1. Work with a budget: Gauge your financial muscle and pick what you can afford and whether you can do that on cash or instalments. Many people save up and do a one-off buy while, as it’s done at Fanaka Real Estate, you can put up a deposit and pay up in instalments. The downside of saving is that by the time you hit your target the value of the property will have risen. What this means is that you should be able to pay for the land without putting too much pressure on your finances. Go for a seller offering competitive prices and flexible payment terms. 2. Identify the area: Location is important as…

Why Kenyan Rent Defaulters May Soon Be Blacklisted

Kenyan landlords are pushing for a plan that seeks to have rent defaulters listed with credit reference bureaus (CRBs). The Urban Landlords and Tenants Association of Kenya (ULTAK) is seeking the Central Bank of Kenya’s authority to implement the proposal. If CBK approves the request, landlords will liaise with CRBs concerning their tenants’ monthly payments. ULTAK secretary-general Ephraim Murigo says the plan will ensure tenants who previously defaulted on rent payments find it hard to rent houses in other locations. Before signing lease agreements, landlords will demand a CRB clearance from those seeking to rent their houses. “Today, landlords resort to a number of crafty ways like locking up a tenant’s belongings to recover unpaid rent. Once our plan is implemented, it will become difficult for tenants to dodge their responsibilities, and hence landlords will have an easier time,” Says Murigo. “My association has come up with a formula whereby tenants will stop feeling like defaulting on rent is normal. We have approached credit reference bureaus to partner with them with an aim of listing all tenants who default on rent payment.” 2018 data by Transunion Credit Reference Bureau shows that more than 500,000 Kenyans have been blacklisted and thus…

Oversupply leads to sharp fall in rent and house prices in Nairobi

An oversupply of prime residential properties in Nairobi is applying pressure that’s forcing buying prices and rents downwards, according to Knight Frank in its Kenya Market Update report for the second half of 2018, which could signal a cooling off in the cost of housing in the capital. Prime residential prices fell by 4.5% in 2018, compared to a 0.9% drop in 2017, as the segment tilted in favour of buyers. Rents in the top-end of the market also dropped by 1.3% in 2018, although a slower decline compared to the previous year’s 2.8%. Mr Ben Woodhams, Knight Frank Kenya Managing Director said sustained demand from expatriates and middle-to high-income earners keen on location and quality of houses helped reduce the decline in high-end residential rents. In the commercial property segment, he noted that the uptake of Grade A office space continued rapidly in the second half of 2018, although prime rents stagnated at Ksh130 ($1.3) per square foot per month owing to the current oversupply. “This report shows absorption of Grade A office space rose by 63 percent in the six months compared to the first half’s uptake,” he said. “Serviced office providers emerged as major takers, with this…

1.5 percent housing levy pay cut for workers to start March

Formally employed workers could start paying a 1.5 percent salary deduction beginning March 1 to finance construction of cheap houses by the State. Transport, Housing and Infrastructure Cabinet Secretary James Macharia Tuesday said the government has reached an agreement with the workers’ union, which will pave the way for an end to court injunctions that had stopped the deduction. “We had injunctions that halted the process, but the parties have agreed to withdraw them so we are ready to proceed with the project,” said Mr Macharia in Nyeri during an inspection of ongoing public projects in the county. Employment and Labour Relations Court Judge Hellen Wasilwa had granted the order to halt the deductions following an urgent application by the workers’ umbrella body, the Central Organisation of Trade Unions (Cotu) in December. Cotu secretary-general Francis Atwoli had faulted the tax, saying there was no public consultation before its implementation. The levy is to be deducted from each employee’s basic salary and remitted to the National Housing Development Fund (NHDF). Violating orders Cotu has, however, not made public its position on the matter. An application filed by the Ministry of Housing asking the court to lift the injunction against the deduction…

Get a money makeover with Kenya’s top money minds

Robert Kiyosaki says, “It is more important to grow your income than cut your expenses. It’s more important to grow your spirit that cut your dreams.” The greatest disservice you can do to yourself is to continue relying on that one source of income. What if it, too, suddenly gets cut off? Where does that leave you? Only poor people oversleep. If you go on the road at 4 AM you will see Prados, Landcruisers, and other big cars. At 6 AM is when you start seeing the Proboxes and Vitzes. That should show you how early wealthy people wake up. When did you last see Bob Collymore trapped in traffic? If you have an 8 to 5 job, what are you doing between 6 and 8? Do poultry rearing, get a dairy cow – anything it takes to get an extra income during your extra hours.Dr. Paul Kibicho, CEO, Panorama Consulting Co. LtdIt is ‘do what makes you money, not what you love’ The worst business advice I ever received was ‘do what you love’ at my New York University graduation commencement. I have since learned ‘do what makes you money’ works much better for me personally. I know,…