Nairobi’s suburbs are experiencing a notable drop in rental prices, as well as house sale prices, according to a recent report by HassConsult released on Tuesday, July 30. Upper Hill and Muthaiga have been identified as the most affected areas, with tough economic conditions cited as the primary cause for this negative trend.
For the second quarter of 2024, Nairobi’s suburbs and satellite towns recorded only a marginal increase of 0.01% in rent prices, reflecting a shrinking demand for rental properties in suburb areas. In contrast, satellite towns showed stronger performance, with an average rent price increase of 2.1%, compared to a 0.9% decrease in the suburbs.
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“This rise in satellite towns can be attributed to accelerated urbanisation, which has bolstered demand and driven up asking prices,” the report noted.
HassConsult attributed the declining rent rates in suburban areas to the growing cost of credit. Property owners are increasingly cautious about raising rents in an effort to retain tenants, as higher taxes and inflation continue to squeeze disposable incomes.
Upper Hill has seen the steepest decline in rental growth, with apartment rental prices dropping by 4.3% over the last quarter. Muthaiga, on the other hand, recorded the lowest annual rental price increase, with a 4.3% decline over the past year.
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The downturn in Upper Hill extends beyond rental prices, as house sale prices in the area also saw a significant drop. Apartments in Upper Hill registered a 3.9% decrease in sale prices over the last quarter and an 8.3% decline annually.
Sakina Hassanali, Head of Development, Consulting, and Research at HassConsult, explained that while higher mortgage interest rates don’t significantly impact overall property price movements due to low mortgage participation in Kenya, they do reduce market liquidity, leading to a dampening of demand.
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