In December, 2024, the Kenya Bankers Association (KBA) released its Housing Price Index (HPI) for the Second Quarter of 2024. The HPI is a quarterly report that analyzes the housing market across different regions and house types.
In this report, luxury real estate is winning as apartments maintain their grip on the market. Meanwhile, middle income properties are tanking.
Housing prices grew slightly to 2.3% in quarter 2 from 2.0% in quarter one of the year. The industry however experienced general growth decline, from 6.6% to 6.0%. Construction activity also declined slightly from a slight 0.1% growth in Q1 to a -2.9% decline in Q2.
Apartments Dominate the Market
Apartments are still the most popular type of housing for buyers accounting for 44.23% of transactions within the industry, according to the report. Although apartments have been dominant for a while their market share reduced slightly compared to previous quarters.
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Maisonettes grew in popularity accounting for 25.96% of property transactions while townhouses decreased in popularity by -2.88%. Bungalows maintained their market share with no significant changes.
Increased Demand for Luxury Real Estate
When to comes to regions or property types according to income levels. Affordable housing or the low income market segment still has a strong grip on the market accounting for 48.1% of sales in quarter 2 of 2024. Low income housing has been dominant through the years as it attracts majority of buyers within the Kenyan population.
33.7%
In 2024, Kenya’s luxury real estate bounced back from a repressed season in 2023. 33.7% of property transactions in quarter 2, 2024 were in this market segment.
~Kenya Bankers Association, HPI (Quarter 2, 2024)
Meanwhile, luxury real estate or the high income market segment saw increased demand, in 2024. In the second quarter, 33.7% of sales involved luxury properties, up from 30.6% in quarter 1.
The demand for luxury real estate has been on an upward trend throughout 2024 as the economy recovers. In 2023 this market segment was the most repressed compared to the rest.
In quarter 2, 2023, for instance, luxury real estate recorded the worst numbers with only 15.2% of sales. Perhaps this was due to increased inflation or maybe the wealthy are increasing in Kenya.
Shrinking Middle Class?
On the contrary, the middle class did not buy as much property in 2024. The sales for this market segment dropped significantly to 18.3% in quarter 2, 2024 down from 27.6% in quarter 1, 2024. It is not clear whether the middle class is shrinking or whether other factors have contributed to the decreasing demand for middle income properties.
Overall the property market remained healthy through the quarters with minor disruptions such as the protests .
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