Kenyan housing market hit by political uncertainty

Kenya's property market has been hit hard by the political uncertainty that has plagued the country in recent times. According to the Hass Consult's index, property prices dropped by 1.8% in the third quarter of the year as the lack of clarity on the electoral process subdued buying activity across all property segments. Investors have put their investment decisions on hold, resulting in a slowdown in the market. Sakina Hassanali, Head of Development Consulting and Research at Hass Consult, shed light on the impact of the political situation on the housing market during a recent interview on CNBC Africa. Hassanali shared that buying activities surged straight after the August 12th results, experiencing a 400% increase in the three weeks following. However, when the Supreme Court announced a new election, buying activity regressed to the levels observed two months before the elections, essentially coming to a standstill. Key areas like Gigiri saw a 4.8% surge, driven by investors who recognized the value in purchasing properties near diplomatic corps and the expatriate community. These areas have remained relatively immune to political changes, leading to sustained demand and subsequent price hikes. The market has seen a cautious approach from 95% of investors, while about 10% have adopted aggressive negotiation strategies to capitalize on the uncertain environment and secure favorable deals. While most segments have faced an investment freeze, some investors have been looking to hedge against the market norm, aiming to benefit from the current situation. Quarterly changes in rental prices have varied across different suburbs, with areas like Kitusuru experiencing a 3.4% increase and Lang'ata witnessing a negative 3.2% adjustment. The surge in rental prices in previously subdued areas has been attributed to the correction of overheated prices during the slowdown period. The cyclic nature of the property market has been evident over the years, with similarities to past election periods. However, the extended period of uncertainty following the recent Supreme Court ruling has exacerbated the situation, leading to a prolonged market stall. The county of Kiambu, known for its high property prices, saw a significant drop in land prices across its satellite towns, which is unprecedented. The mention of potential policy changes by the outgoing county government to review land use for agricultural purposes has instigated panic among landowners, resulting in a rush to sell land at discounted prices. These policy discussions have directly impacted land values, causing a notable decline in prices across Kiambu County's satellite towns. The uncertainty surrounding future land use and the political landscape continues to weigh heavily on the property market, prolonging the period of stagnation and subdued buying activity.