Nairobi home prices record sixth highest growth globally - Report

 

An aerial view of houses in an upmarket estate.

House prices in Nairobi have recorded a notable increase in the past year following the high interest rates that have had a significant impact in the economy.

A quarterly report released by real estate firm Knight Frank showed that Nairobi’s property prices soared to sixth fastest growth globally, recording a 6.6 per cent increase in the past 12 months. 

Globally, house prices hiked by 2.6 per cent in the 12 months to the end of June, compared to the 4.2 per cent growth seen in the 12 months to the end of March.

This pointed out to the lower spending power experienced across the 44 cities globally, attributed mainly to rising interest rates.

Housing markets had a sharp decline in late 2022 but began to increase from mid 2023 following a decline in the bank’s interest rates in the respective countries.Manilla, Philippines, was ranked the first with a 26 per cent annual rise, followed by Mumbai and Delhi (India) which recorded a price hike of 13 per cent and 10.6 per cent respectively. 

Los Angeles, USA, was ranked fourth with an 8.9 per cent price rise while Miami recorded a 7.1 per cent price increase. 

Nairobi was the first African city ranked and sixth globally, up from its 19th rank in the previous report.

According to Liam Bailey, Knight Frank’s global head of research, the slump in price growth experienced globally could bounce back from a stimulus in interest rate cuts, pointing out that that lies within the government’s purview.

“The slowing in price growth this quarter across global prime markets reflects the fact that, without further stimulus from rate cuts, the bounce in market pricing we have seen over the past few quarters is running out of steam,” Bailey said in the report.

“The biggest influence on future price growth lies in the hands of central banks and their confidence to cut rates further over the next 12 months.” 

On August 6, 2024, the Central Bank of Kenya (CBK) cut its base rate from 13 per cent to 12.75 per cent, meaning lower interest rates for those seeking loans from financial institutions.

CBK Governor Kamau Thugge, however, defended the previous high lending rate, saying it stabilised the country’s shilling and lowered the inflation rate. 

Data from the Kenya National Bureau of Statistics (KNBS) showed that the inflation rate dropped from 8.1 per cent in October last year to 4.3 per cent in July 2024. 

“The MPC noted that its previous measures have lowered overall inflation to below the mid-point of the target range, stabilised the exchange rate, and anchored inflationary expectations,” the CBK Governor said.

By Brian Kimani