Low-end townhouses shoot rent prices

Rent prices are expected to keep rising this year amid rising demand for rental houses as opposed to mortgages, reveals Hass Residential Price Index for the final fourth quarter of 2013.Image

Releasing the Hass Property Index for the year ended 2013, Ms. Sakina Hassanali, Head of Marketing at HassConsult says that  for the country’s expanding middle classes, the path of progressing from renting to purchasing is being blocked, now for a third year running, by the nation’s exceptionally high mortgage rates. The report shows that there is a significant upsurge in the rate of rent from the month of October to December different from the second and third quarter reports which showed a fall in rent as we set into the start of last year.  

“Typical first-time buyers of apartments and low-end town houses are continuing to find mortgages unaffordable, creating a demand bulge in rentals.” Ms. Hassanali added.  This high pricing of lending rates by various commercial banks in Kenya has continued to limit potential buyers to take up any mortgage and instead opt to stretch their income into renting. However, this has increased demand for residential rentals in different parts of the country.

Asking prices for residential property sales reduced by the end of last year in general. Detached houses and apartments realized an average dip at 1.3 per cent while semi-detached had their prices increase by a marginal 0.6 per cent. Rent on the other hand rose by an average of 4.2 per cent in the final quarter.  This saw semidetached rents increase by 4.2 percent while detached rents increased by a steady 1.9 per cent in the final quarter.

The mortgage rates on the other hand remained relatively unchanged for the better part of last year at an overall average rate of 16.89 per cent with some bank ending their promotional mortgage offers. Last year started at a fragile rate following the general elections in the month of March, but was yet to change in the fourth quarter and bear fruits in the property market.

ImageManaging Director, Mortgage Company Carol Kariuki says that the high pricing in mortgages has continued to limit the uptake of mortgages, with now a prolonged impact on house pricing, and on the returns on property as an investment.

In a report dubbed TMC Mortgage Report for the fourth quarter of 2013, Mrs. Kariuki noted that most of the commercial banks in Kenya focused on pricing mortgages based on a case-by-case basis depending on the relationship with their customer. It will be seen that with the Central Bank of Kenya base rate set at 8.5 per cent, five Kenyan commercial banks have had their mortgage rates priced more than 9 percentile points above the base rate.

Both Hassanali and Mrs. Kariuki concur that the now prolonged period of property sales prices, with the mortgage market stalled, is also now having a negative impact on property investment returns and this reflects some lack of interest and funds for mortgage lending by these banks.

Advertisements

About Demcel

I am a professional creative writer, i flock with great thinkers!

Posted on February 12, 2014, in PROPERTY NEWS, Uncategorized and tagged , , , . Bookmark the permalink. 1 Comment.

  1. Good way of explaining, and pleasant paragraph Low-end townhouses shoot rent prices | World for you to obtain information concerning my presentation subject matter, which i am going to deliver in school.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: