High inflation rate forces workers in most urban centres to seek cheaper housing

By Ben Kinyanjui

High inflation rate has forced workers in most urban centres in the country to seek cheaper housing in the outskirts, says Hass Property index report for the third quarter of this year.

High inflation rate pushing workers to the outskirts

Also affected by the inflationary and currency pressures is the entire construction industry that has slowed down due to low demand for houses as well as high cost of building materials.

“The shift in rental prices suggests we arte seeing consumers who are moving down the accommodation ladder as their spending gets increasingly pressured-moving from larger to smaller rental properties and thus increasing demand at the bottom end of the market,’ says Ms Farhana Hassanali of Hass Property Index.

Ms Hassanalis says asking rentals across all properties fell by 0.2 per cent in the third quarter compared with a similar period last year that saw rents rise 3.9 per cent.

Worst hit were town houses where asking rentals continued to fall by a further 1.9 per cent pointing to the possibility of some oversupply in the availability of town houses for rent.

Only apartment rentals saw further upwards pressure, up 1.2 per cent, though the rise was concentrated at the bottom end of the apartments market.

The rentals on larger apartments fell over the period though the rental on smaller, cheaper apartments went up.

However, the report says house prices stabilised despite the pressures as almost of all the homes owned are already fully paid for, and require no monthly payments.

It says closing sales prices on all houses stabilized, increasing by 0.8 per cent, after falling by two per cent in the last quarter.

“The tiny segment of homes that have been bought with mortgages has left the local housing stock largely protected from the forced sales that follow from mortgage defaults in an economic downturn,” says the report.

“We see the on-going stability in house prices as indicative of a market with few forced sales and some extension in new funding for house buyers.”