600 take mortgages every quarter

The just-released Hass Consult Property Index brought good news to developers and renters, but a distressing message to home buyers.

The summary of the report’s findings is that the housing market, which had been subdued since the onset of the high interest rates regime in 2011, is now vibrant again.

The findings, released last week, revealed “a takeoff in asking prices for properties, a slowdown in rent rises, and a restoration of the high returns on investment in the Kenyan housing market”.

But the report also revealed very important data, which many people missed. It said: “The banks, which see valuations on mortgaged properties, typically handle, in total, some 600 house sales per quarter, which is the number of new mortgages currently issued in Kenya.”

What this means is that every three months, about 600 Kenyans buy houses through mortgage. That implies that in a year, the country registers at least 2,400 new mortgage accounts.

While releasing the report last week, Sakina Hassanali head of marketing and research at HassConsult Ltd, appeared to give assurance to anyone who might doubt the findings by saying: “We are delighted that our research team...has meticulously compiled such a significant data set, and we shall continue to develop our research base and reporting capabilities.”

By December last year, the Central Bank of Kenya, was still talking of about 20,000 active mortgage accounts in the country.

If the Hass Consult figures are accurate, then the Government has a big problem with industry data collection and collation.

It means there could be up to 30,000 mortgages in the country. That would be commendable, especially at a time when interest rates are still way out of reach, even for some of the best paid middle-class Kenyans.

Move on rates

To its credit, the Government now seems more keener to have banks lower interest rates than ever. It is understood that Deputy President William Ruto’s office is planning to initiate talks with banks with the aim of having single digit rates.

If the talks succeed, that will be the first time Kenyans will enjoy low interest rates. The number of Kenyans buying homes through mortgages will inevitably go up.

But that is only if house prices remain stable or go down. The Hass Property Index Report talked of “a takeoff in asking prices for properties”. Simply put, property prices are rising, again.

As I have said in this space before, high property prices and runaway interest rates are the bane of home ownership in Kenya.

If interest rates were low and house prices were reasonable, then we would be talking of at least 100,000 mortgage accounts in the country.

I think developers should read the signs of the times and start pricing their housing developments reasonably. It does not help a potential homeowner much when interest rates are reasonably low, but property prices are rising by millions every year.

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