High-end residential house prices were hit by flat or falling demand for the better part of last year

The prices of houses in Nairobi’s upper and high-end markets are set to drop after two years of steady rise, a new housing index indicates.

The Composite Index and Hass Property Index developed by property firm Hass Consult indicate that house prices increased constantly from mid 2006 to 2008 and started levelling off heading towards 2009.

The two indexes show that the high-end property market was undergoing a market correction after an initial bubble burst in 2006.

“After some downward correction in sales prices and with some downward correction in asking prices, we noted that sales prices themselves stabilised in the fourth quarter and the volume of activity improved notably,” says the company’s Property Development Manager, Farhana Hassanali.

According to the firm’s analysts, property prices realised in the fourth quarter of 2009 could come tumbling down as effects of the financial crisis slowly wear off. The dip however created an appetite among buyers as the number of those interested in buying homes surged upwards.

The Composite Index also shows high-end residential house prices hit by flat or falling demand for the better part of last year and into this year. This is believed to be in part due to dwindling diaspora remittances occasioned by job loses and salary cuts.

The Hass Composite Index constitutes data drawn from established estate agencies in Nairobi, encompassing sales data over the last five years. The data does not include properties with development potential or land plots, but town houses, apartments and villas.

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