The Kenyan housing prices index contracted by 0.20 percent during the second quarter of 2020 compared to 0.51 percent in the first quarter, KBA-HPI said on Monday.
According to the Kenya Bankers Association House Price Index for the second quarter, despite still being on the negative side, the growth of house prices pointed to a stabilising market.
“With demand remaining depressed, the concluded sales during the second quarter of the year represented a nearly 40 percent drop from the previous quarter,” notes the KBA-HPI, adding that while demand during the quarter was muted due to a weak economy, the price movements were not drastic, partly due to the characteristic tendency of house prices to resist reductions.
“While showing positive growth during the first quarter of 2020, the broader construction and real estate sector manifested the weakness in the broader economy with its expansion of 5.3 percent being 0.38 percentage points lower than a similar period last year,” said KBA Chief Executive Officer Dr. Habil Olaka.
The performance of the sector was on the back of some of the leading indicators remaining on the positive territory but still subdued. For instance, cement consumption (a supply-side proxy) continued to grow. Nonetheless, cement consumption was linked more to other public sector-oriented construction projects than to housing.
The sector received mild demand support through the growth in credit although with the growth remaining sub-optimal.
On the back of the outlined broader developments in the sector, there was a decline in the importation of construction materials mainly fabricated metal products and cement.
The effect of the decline on the property development is anticipated to come with a lag, and its out turn can only be evident in subsequent quarters.