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Adams Arcade, Ngong Road
P.O. Box 29310-00100, Nairobi

Tel: +254 729 933955, +254 737 933955
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Hass Property Index Q4 2013 PDF Print option in slimbox / lytebox? (info) E-mail

Overpriced mortgages push up semi-detached rents

  • Overall, asking prices for residential property sales fell in the fourth quarter of last year
  • Asking prices fell by an average 1.3 per cent for detached houses and apartments
  • But asking prices for semi-detached houses continued to rise, albeit by a marginal 0.6 per cent
  • However, the rate of rent increases accelerated from October to December
  • Asking rents for apartments, which had fallen during 2013, rose by 4.2 per cent in the final quarter
  • Semi-detached rents also continued their sharp rise, up a further 4.5 per cent on the previous quarter,
  • and 19.4 per cent on a year earlier
  • Asking rents for detached houses continued to rise at a more subdued rate of 1.9 per cent in the fourth quarter
  • The now prolonged period of property sales prices, with the mortgage market stalled, is also now having a negative
  • impact on property investment returns


Index Highlights
index
index

 

HassConsult today announced the results of the Hass Residential Price Index for the fourth quarter of 2013, revealing

accelerating rent rises in the final months of last year, driven by significant over-demand for rentals.

“For the country's expanding middle classes, the path of progressing from renting to purchasing is being blocked, now

for a third yearrunning, by the nation's exceptionally high mortgage rates,” said Ms Sakina Hassanali, Head of Research

and Marketing at HassConsult.

“Typical first-time buyers of apartments and low-end town houses are continuing to find mortgages unaffordable, creating

a demand bulge in rentals.”

This clustering saw semi-detached rents moving sharply upwards all year, rising by 4.5 per cent in the fourth quarter on

third quarter levels, and by 19.4 per cent on a year earlier.

The final quarter also saw a renewed take-off in asking rentals for apartments, up by 4.2 per cent on the previous quarter,

taking the rise for the year to 2.2 per cent, as the sudden rises more than offset earlier falls in asking rents.

In property sales, however, only the asking prices of town houses rose from October to December, up by 0.6 per cent on

the previous three months,while the asking prices for detached houses and apartments fell by 1.3 per cent.

'At a profound level, the failure of the mortgage market to provide a new route to home ownership is now shaping the

Kenyan property market in a way that cannot be sustainable,” said Ms Hassanali.

“Demand is bulging in rental properties, even as developers are being deterred from new construction by flat sales prices

and rising costs. The sum is ever higher rents, in a population made up of landlords and tenants.”


For more information, please contact:
Sakina Hassanali - Head of Marketing & Research
HassConsult Ltd
ABC Place, Westlands
Tel: +254 020 4446914

 

 

 

SNAP SHOTS:

The Hass Composite sales Index is representative of
all property for sale in Kenya.

Property values have increased by 3.37 times since
2000.

The index shows a property price fall of 1.0% in
the last quarter and a 0.3% rise in the last year

 

sales

 

 

SNAP SHOTS:

The annual average is representative of the average
price of all properties offered for sale in Kenya

The average value for a property has gone from 7.1
million in December 2000 to 24.2 million in
December 2013

The average value for a 4-6 bedroom property is
currently 33.8 million

The average value for a 1-3 bedroom property is
currently 11.4 million

 

sales

 

SNAP SHOTS:

  • The Mix by Year is a measure of the percentage that
    each type of property represents in the market.
  • In 2001, apartments took up 23.5% of the market, semi-detached took up 24.5% of the market and detached houses took up 52% of the market.
  • In 2013 however, apartments took up 41.7% of the market, semi-detached houses took up 24% of the market and detached houses took up 34.3% of the market.

 

SNAP SHOTS:

• Detached houses include stand alone houses, bungalows, cottages and villas either on their own plot or in a gated community
• Property values for detached houses have increased by 3.94 times since 2001, a 1.3% fall in the last quarter and a 0.5% rise in the last year. The average price for a detached house is currently 34.7 million up from 8.8 million in December 2000.

sales

SNAP SHOTS:

• Semi-detached houses include townhouses and maisonettes that are semi-detached or terraced.
• Property values for semi-detached houses have increased by 2.96 times since 2001, a 0.6% rise in the last quarter and a 0.1% rise in the last year. Average price for a semi-detached house is currently 19.4 million up from 6.5 million in December 2000.

sales

SNAP SHOTS:

• Apartments include apartments, duplexes and triplexes.
• Property values for apartments have increased by 2.35 times since 2001, a 1.3% fall in the last quarter and a 0.2% fall in the last year. The average price for an apartment is currently 12.2 million up from 5.2 million in December 2000.

sales

 

sales

 

SNAP SHOTS:

The Hass Composite Letting Index is representative
of all property for rental in Kenya

Rents have increased by 3.13 times since 2001

The index shows rents have risen by 3.0% in the last quarter but have risen by 8.5% in the last year.

 

 

sales

 

SNAP SHOTS:

The annual average is representative of the average
rent of all properties offered to let in Kenya.

The average rental for a property has gone from
Kshs. 38,516 in December 2000 to Kshs. 120,372 in
December 2013.

The average rent for a 4-6 bedroom property is
currently Kshs. 183,899

The average rent for a 1-3 bedroom property is
currently Kshs. 67,651

 

sales


SNAP SHOTS:

The Mix by Year is a measure of the percentage that each type of property represents in the market.

In 2001, apartments took up 45.3% of the market,
semi-detached took up 20.5% of the market and
detached houses took up 34.1% of the market

In 2013 however, apartments took up 54.3% of the
market, semi-detached took up 20% of the market
and detached houses took up 25.7% of the
market.

 

 

SNAP SHOTS:

• Detached houses include stand alone houses, bungalows, cottages and villas either on their own plot or in a gated community.
• Rental values for detached houses have increased by 3.25 times since 2001, a 1.9% rise in the last quarter and a 8.5% rise in the last year. The average rental for a detached house is currently Kshs. 185,029 up from Kshs. 56,959 in December 2000.

sales


SNAP SHOTS:

• Semi-Detached houses include townhouses and maisonettes that are semi-detached or terraced.
• Rentals for semi-detached houses have increased by 2.97 times since 2001, a 4.7% rise in the last quarter and a 19.4% rise in the last year. The average rental for a semi-detached house is currently Kshs. 126,724 up from Kshs. 42,688 in December 2000.

sales

SNAP SHOTS:

• Apartments include apartments, duplexes and triplexes.
• Rental values for apartments have increased by 3.01 times since 2001, 4.2% rise in the last quarter and a 2.2% rise in the last year. The average rent for an apartment is currently Kshs. 69,858 up from Kshs. 21,638 in December 2000.

sales
Last Updated on Thursday, 23 January 2014 13:49
 

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Did you know

Buy-to-let gains recovering as

mortgage prices fall

  • Mortgage rates have dropped sharply in the last two months
  • The best mainstream mortgage offer is now Barclays at 15.5 per cent
  • The highest mainstream mortgage offers are now from National Bank and Chase Bank at 22 per cent
  • The comprehensive cuts have seen the average mortgage rate move to 19 per cent, from 22.5 per cent in the second
    quarter
  • Foreign currency mortgages are being made available at much lower rates still, from 9 to 10.25 per cent, but carry
    heavy exchange rate risk
  • The third quarter brought a sharp recovery in the combined returns from rents and house price rises for buy-to-lets, to
    13.12 per cent in September, up from 6.81 per cent in June 2012

Mortgage rates declined, in some cases by as much as 6 percentile points, in the third quarter of 2012, reported The
Mortgage Company in its quarterly mortgage report.
At the same time, the returns from buy-to-lets jumped sharply, significantly narrowing the gap between returns and
borrowing costs.
The biggest rate cuts since June came from Barclays, which cut its mortgage rate by 6.4 percentile points, to offer the
currently lowest mortgage rate in the mainstream market, at 15.5 per cent.
Other notable cuts came from HFCK, which cut its rates by 5 percentile points to 18 per cent, and Equity Bank, which cut
its rate by 3 points to 21 per cent.
However, many mainstream banks were slow to follow, finally announcing cuts this week. This latest realignment has
moved the average mortgage rate to 19 per cent, and sees National Bank and Chase Bank topping the league for the
country's most expensive mainstream mortgages, at an annual interest rate of 22 per cent.
“Some mortgage takers are really suffering through holding mortgages with some of the country's most expensive
suppliers - in some cases now paying several hundred thousand shillings in extra interest payments a year,” said Ms Carol
Kariuki, the MD of The Mortgage Company (TMC).
“This, alone, brings home the need for full information flows on the different mortgage rates available in the market, so
that consumers can choose genuinely competitive mortgage offers,” she said.
TMC also published its first league table on the foreign currency mortgage rates available in Kenya from I&M Bank, CFC
Stanbic, CBA, Equity Bank and Bank of Africa.
“With interest rates on these mortgages running at between 9 and 10.25 per cent, these mortgages are currently far
cheaper than shilling-denominated mortgages, but mortgage takers need to take great care with foreign currency
mortgages, where repayments are in dollars, pounds or Euros. When the exchange rate moves against them, it can leave
them carrying huge extra burdens in buying the foreign currency for their mortgage repayments,” said Ms Kariuki.
For mortgage financed landlords, who for the last decade, were earning more from rent and house price appreciation
than they were paying in mortgage interest, the last year brought a marked dip into negative returns.
However, the gap between gains on buy-to-let houses and pay-outs on mortgage interest narrowed sharply in the third
quarter, with buy-to-let returns climbing to reach 13.81 per cent by September, from 6.81 per cent in June.

Total returns on mortgaged house purchases

A comparison of the costs of a variable mortgage, versus the gains in house price appreciation and rental
income in each year.

How recent rate cuts are leading to

big savings on repayments

Scenario: A Kshs. 10m mortgage (20% deposit) over 20 years based on the
best rate available at that time.

SNAP SHOTS

A 3.5% rate cut from April 2012 to October 2012 led to a 16.5% reduction in monthly repayments.
A 2.1% rate cut from April 2012 to July 2012 led to a 11% reduction in monthly repayments.
A 1.4% rate cut from July 2012 to October 2012 led to a 6% reduction in monthly repayments.

Preferential Rate Mortgages

Did you know that high net worth individuals and preferential clients can sometimes get better rates?

Mortgages available to the diaspora

At a glance, banks best rates for foreign currency mortgages available to those earning an income in
US Dollars, GB Pounds or Euros including but not limited to the diaspora.

How Kenyan property yielded better returns for the diaspora

over the last ten years

Scenario: Buying a Kshs. 10m home in Kenya with a 20% deposit and a 9%* interest rate over a 10 year period yielded
a return of Kshs. 18.9m while buying a home in the US with a 20% deposit and a 3%* interest rate over a 10 year period yielded
a return of Kshs. 3.7m. This is because property in Kenya over the last ten years has appreciated on average 331%
versus 50% for US properties. *Return is calculated by subtracting total cost of home from value of property at period end

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